More than $865 million to be distributed to credit unions as agency closes corporate rescue plan

More than $865 million will be distributed by September to credit unions that were account holders at three failed corporate credit unions as the federal credit union regulator closes its program to resolve the institutions, the agency said Monday.

In a release, the National Credit Union Administration (NCUA) said the distribution of $865.5 million would be made to 1,800 credit union capital account holders of the former Members United, Southwest Corporate and U.S. Central corporate federal credit unions.

The three corporate credit unions (which served as sorts of “banker’s bank” for credit unions) were initially taken over by the NCUA in 2010. Between then and now, the agency set up what it called the “Corporate System Resolution Program,” which issued notes guaranteed by the agency to investors to help the credit union system resolve the failures of those corporates and two others: Western Corporate (also known as WesCorp) and Constitution.

Also Monday, NCUA announced the of the NCUA Guaranteed Notes (NGN) program, which stood behind the resolutions. The agency said the that it will “continue to effectuate its plan to orderly liquidate the remaining post-securitized assets and make further distributions when possible.”

In its release, the agency noted that to date, it has previously made two rounds of distributions: the first, in July 2020,  to the former credit union capital holders of Southwest Corporate; the second, in April of this year, to the former credit union capital holders of Southwest Corporate, Members United, and U.S. Central.

The agency said the former capital holders of those three corporates will also receive the latest round of distributions.

The third distribution will mean a total $1.3 billion will have been distributed to the former account numbers, NCUA said.

NCUA to Distribute $865.5 Million Under Corporate System Resolution Program