WASHINGTON (6/29/12)--The most important implication for credit unions of the new Temporary Corporate Credit Union Stabilization Fund (TCCUSF) financial statements is what they say about the likely remaining assessments for that fund, said Credit Union National Association (CUNA) Chief Economist Bill Hampel in an analysis of the fund's audited statements.
The National Credit Union Administration (NCUA) received a clean audit of its corporate stabilization fund last week (News Now June 25). Although it came four months after the release of financial statements for the other major funds managed by the NCUA, the TCCUSF statements came about six months earlier than last year.
When announcing the clean audit, NCUA Chairman Debbie Matz said agency staff is working to update the corporate system resolution loss projections through year-end 2011, and will post the information on the NCUA's Corporate System resolution Costs webpage by the end of June.
Hampel said that, pending the update, it can be inferred from the financial statements that as of last December the NCUA's estimates of the ultimate costs of the corporate stabilization are essentially unchanged from what they were at the end of 2010. A negative net position of $5.3 billion as of December 2011 represents the latest estimate of the amount to be paid in future stabilization assessments.
"It is encouraging that the loss estimates have not increased over the full year 2011. However, the fact that they did not fall as previously suggested is disappointing," said Hampel.
The CUNA analysis suggests that the loss estimate declined about $1.5 billion from December 2010 to August 2011, but then rose by a similar amount by the end of the year, to end the full year unchanged.
Hampel reminded that the loss estimates are just that-- educated predictions.
"The fact that the U.S. housing market has been improving over the past few months suggests the ultimate losses could be lower. Nevertheless, based on this latest loss estimate, it would require annual assessments of approximately 10 basis points for the next five to six years to pay off the total resolution costs."
The NCUA has told CUNA that this year's assessment will be on the agenda for its board meeting on July 24.