North Dakota credit unions want their piece of the ‘resolution’ pie | Credit Union Journal
The National Credit Union Administration continues to distribute recovered funds to credit unions across the country, but some in North Dakota believe they are being ignored and deprived of more than $10 million.
On August 29, the NCUA said it would distribute $395 million to thousands of credit unions as part of its ongoing efforts to resolve the dissolution of four corporate credit unions after the financial crisis.
The Corporate System Resolution Program was created by the NCUA to stabilize, resolve, and reform the corporate credit union system following the 2008 financial crisis.
Including the current distribution, the program has returned more than $2.6 billion to former members and shareholders in paid-up capital, and nearly $292 million in shareholder dividends.
However, none of those payments included North Dakota credit unions because the NCUA cited a “technical aspect” that excludes those institutions from the settlement, said Jeff Olson, president and CEO of Dakota Credit. Union Association.
But the Association and 30 state credit unions are working to convince the NCUA to release the salvaged assets, he said.
In fact, last week the Association filed for the money after the NCUA suggested it do so.
A bit of history: Before the financial collapse of 2008, the largest corporate credit union in the United States was the Central Federal Credit Union of the United States, which provided services to other credit unions in company – actually acting as a credit union of a corporate credit union. One of those he worked with was the Midwest Corporate Federal Credit Union.
In early 2009, in response to investment losses suffered at US Central, the NCUA implemented the Business Stabilization Program and placed US Central in conservatorship.
The NCUA then imposed an additional insurance premium on federally insured individual credit unions to compensate for investment losses at U.S. Central, which were estimated at
be close to $6 billion.
In October 2010, the NCUA issued a Member Capital Claim Receipt to Midwest Corporate representing the value of members’ capital account balances as of November 20, 2008 and paid-up capital. For North Dakota credit unions, these amounts were estimated at $10.5 million and $3.3 million respectively.
But Olson said the NCUA told the Association that because Midwest Corporate disbanded in 2011 and the legal existence of the charter was formally revoked three years later, Midwest Corporate members were not not eligible to receive a refund.
The NCUA essentially claims that because the corporation has been liquidated, it has no legal avenue or legal entity to repay the recovered assets.
The Association asked the NCUA what then happened to the assets. “And they said ‘we don’t really know,'” Olson said.
An NCUA spokesperson told American Banker that the regulator’s board, as liquidation agent, is reviewing recently filed claims against the United States’ Central Asset Management Estate in accordance with NCUA regulations. .
In the meantime, the Association has been helped by its two senators.
In an Aug. 15 letter to the NCUA, North Dakota Senators Kevin Cramer, who serves on the Senate Banking Committee, and John Hoeven encouraged the agency “to remain in close communication with the Dakota Credit Union Association during that it is working on the claims process to ensure that all appropriate claims are satisfied to the extent possible and that these recovered assets are returned to their rightful owners.”
Association 6 filed the lawsuit last week, but Olson said class attorneys believe the move may be just one more “ticket box” for the NCUA, and the matter may ultimately come to a head. find in court.
Olson said the financial crisis and the resulting fallout have had a negative impact on state credit unions. In fact, North Dakota has lost 16 credit unions to mergers since 2009.
“Obviously the loss of revenue, split assessments of insurance premiums and subsequent regulations have contributed to the consolidations,” he said.
Now some of North Dakota’s smaller credit unions are trying to recover the funds. “It’s a last hope for them,” Olson said. “I don’t know if they can hold on and waive further legal fees.”