NCUA Media Advisory

Corporate Credit Union Update    

July 7, 2009, Alexandria, Va. – Under the delegated authority approved by the NCUA Board to implement the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) staff has begun utilizing the TCCUSF to cover expenses associated with NCUA’s corporate credit union stabilization efforts. As a result natural person credit unions will be able to reflect a fully restored NCUSIF deposit on their June 30th Call Reports. The NCUA Board is expected to make a premium determination at its September meeting.

As part of this shift to reliance on the TCCUSF the following actions are being implemented:

• The TCCUSF has paid the NCUSIF $1 Billion dollars ($1,000,000,000) in exchange for all of the NCUSIF’s right title and interest in the one billion dollar capital note issued by U.S. Central FCU thereby releasing the NCUSIF from any reserve requirements related to the capital note;
• Responsibility for the Temporary Corporate Credit Union Share Guarantee Program (TCUSGP) established by the NCUA Board in January 2009 has been removed from the NCUSIF and placed with the TCCUSF; and
• Responsibility for the Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP) established by the NCUA Board in October 2008 and modified in May 2009 is being removed from the NCUSIF and placed with the TCCUSF. The TCCULGP actions are expected to be completed by July 31, 2009, but have no impact on the NCUSIF reserves for this pay-as-you-go program.

NCUA posted an archive of the June 24th Corporate Credit Union Update audio Webcast to the Corporate Stabilization Program portion of its website (http://www.ncua.gov/Resources/CorporateStabilization/index.aspx). Just under 4,000 participants attended the webcast to hear details of actions taken at the June 18th Board meeting to implement the TCCUSF and its impact on credit unions, as well as a general corporate credit union update. Participants were provided an opportunity to submit questions to the presenters, and NCUA plans to post a Q&A document in the next few weeks to address topics raised during the presentation. See NCUA Letter to Credit Unions 09-CU-14 for additional information related to implementation of the TCCUSF.

Corporate credit unions are successfully meeting member needs for the seasonal outflow of funds that normally occurs at this time of the year. All but two corporate credit unions have signed agreements to participate in the recently modified Temporary Corporate Credit Union Liquidity Guarantee Program. NCUA continues to emphasize the importance of natural person credit unions supporting the corporate credit union system and using it to meet their liquidity needs.

Normal operations continue without interruption at U.S. Central Federal Credit Union (U. S. Central) and Western Corporate Federal Credit Union (WesCorp). Last week, WesCorp announced strategic cost saving initiatives, including consolidations and staff reductions. WesCorp is expected to realize a 30 percent decline in operating costs from 2008 levels. Discussions continue between US Central and its external auditors regarding the 2008 financial audit.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 90 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

- NCUA -