Advocacy on the Move
NCUA Announces Distribution of $865 Million to Members of Failed Corporate Credit Unions
June 29, 2021
The National Credit Union Administration, as liquidating agent for the corporate estates that failed during the Great Recession, announced the largest distribution to date this week. The $865.5 million will be distributed to the capital account holders of the former Members United, Southwest Corporate, and U.S. Central Corporate credit Unions. Many Northwest credit unions were members of Southwest Corporate. The $140 Million membership capital distribution from Southwest Corporate’s estate, expected by Sept. 30, brings the total distributions from Southwest Corporate to $404 million which is equal to 100% of member capital. Southwest Corporate capital account holders are projected to receive a liquidating dividend totaling $319 million when the estates are completely resolved.
Members United Corporate Credit Union shareholders are also expected to receive 100% of member capital as well as a small liquidating dividend and Constitution shareholders are expected to receive about 54% of member share account balances.
One thing that credit unions should note is that there will be approximately $1.67 billion in U.S. Central distributions with some of those distributions being made to existing Corporates that had paid-in-capital or membership shares in U.S. Central. It is incumbent upon credit unions that held membership in these Corporates prior to the financial crisis, to inquire how those recoveries are being deployed to support the credit unions that held membership prior to U.S. Central being put into receivership.
The distributions were made possible in large part due to legal recoveries of more than $5 billion from banks, over claims related to misrepresentations of residential mortgage-back securities warranties. There are still a handful of legal cases that remain unresolved. The final corporate resolution will likely take place once all legal options have been exhausted in the unresolved legal cases.