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Recoveries in Securities Cases Reach More than $2.5 Billion

ALEXANDRIA, Va. (March 24, 2016) – The National Credit Union Administration today announced acceptance of a $29 million offer of judgment from Credit Suisse to resolve claims arising from losses related to purchases of residential mortgage-backed securities by Members United and Southwest corporate credit unions.

The NCUA Board initiated litigation as liquidating agent for the failed corporate credit unions. The offer of judgment includes $29 million in damages plus prejudgment interest in an amount to be determined by the Court as well as reasonable attorneys’ fees to be determined by agreement between the parties or by the Court.

“NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected,” NCUA Board Chairman Debbie Matz said. “We will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis with the goals of minimizing net losses of the corporate crisis and providing a future rebate to credit unions.”

NCUA has now obtained more than $2.5 billion in legal recoveries in securities cases. Net proceeds are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.  Recoveries by the Stabilization Fund reduce the likelihood of assessments charged to federally insured credit unions to pay for the losses caused by corporate credit union failures.

NCUA still has litigation pending in federal court in Kansas against Credit Suisse for sales of faulty residential mortgage-backed securities to U.S. Central and Southwest corporate credit unions. It also has lawsuits pending against several other firms based on the sale of faulty securities. NCUA also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses. NCUA was the first federal financial institutions regulator to recover losses from investments in these securities on behalf of failed financial institutions.

ALEXANDRIA, Va. (March 25, 2016) – Despite a weak start in the early part of the year, forecasters expect moderate growth in the U.S. economy, job gains of around 200,000 per month and the unemployment rate to decline to about 4.5 percent at the end of this year, according to a new Economic Update video released today by the National Credit Union Administration.

The latest video in the agency’s Economic Update YouTube series is available here (opens new window).

“For credit unions, the outlook is good news,” NCUA Chief Economist Ralph Monaco said. “It suggests continued solid loan growth and relatively low credit risk. It points to rising deposits and continued membership gains.”

However, some regions and sectors in the U.S. are likely to face challenges for the balance of this year. For example, employment was down compared to a year earlier in states with considerable ties either to the oil industry or to other industries that support oil production.

Credit unions in those areas, Monaco said, “are more likely to see weakening loan demand, increases in delinquency and slower deposit and membership growth.”

The latest Economic Update also reviews recent Federal Reserve policy moves, suggesting what they might mean for the outlook for interest rates and how they might affect credit unions this year.

NCUA’s Economic Update video series is an ideal information resource for credit union board members, loan officers and management. It is available on NCUA’s YouTube channel (opens new window).

Member Deposits Remain Protected to $250,000, Member Services Uninterrupted

ALEXANDRIA, Va. (March 25, 2016) –Clarkston Brandon Community Credit Union, of Clarkston, Michigan, has merged into Michigan State University Federal Credit Union, of East Lansing, effective today, the National Credit Union Administration announced.

The new Michigan State University Federal Credit Union members should experience no interruption in services, and member deposits remain protected by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States. Members may visit the Share Insurance section (opens new window)of NCUA’s MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

New Michigan State University Federal Credit Union members with questions about their accounts can contact the credit union by telephone at 1-800-678-4968 Monday through Friday from 7 a.m. to 9 p.m. Eastern and Saturday from 9 a.m. to 3 p.m. Eastern. Members may continue to transact business at both former Clarkston Brandon Community Credit Union locations at 8055 Ortonville Road in Clarkston and 4 South Street in Ortonville. Members can visit Michigan State University Federal Credit Union’s website (opens new window)for more information about the credit union, its services and branches.

Prior to the merger, Michigan State University Federal Credit Union served 208,650 members and had assets of $3.03 billion, according to the credit union’s most recent Call Report.

At the time of the merger, Clarkston Brandon Community Credit Union was a federally insured, state-chartered credit union with 8,536 members and assets of $68.5 million, according to the credit union’s most recent Call Report. Chartered in 1957, Clarkston Brandon Community Credit Union served anyone who lived, worked, worshiped, attended school in, and businesses in, the Michigan counties of Oakland, Genesee, Lapeer, Livingston and Macomb.

The State of Michigan Department of Insurance and Financial Services placed Clarkston Brandon Community Credit Union into conservatorship on Jan. 13, 2016 and appointed the National Credit Union Administration as conservator. The two agencies worked together to address issues affecting the credit union’s safety and soundness and determined that merging Clarkston Brandon Community Credit Union into Michigan State University Federal Credit Union was in the best interests of the members.

Join the Conversation to Learn about Effective Financial Literacy Programs

ALEXANDRIA, Va. (March 28, 2016) – There is still time to register for the National Credit Union Administration’s third annual financial literacy webinar, “The Pathway to Financial Well-Being,” to be held Wednesday, March 30, 2016, at 2 p.m. Eastern.

Online registration is available here (opens new window). Participants will also use this link to log into the webinar. Registrants should allow pop-ups from this website. For technical questions about accessing the webinar, please email [email protected]. There is no charge for the webinar.

Credit unions that want to learn more about creating and enhancing financial literacy programs can receive useful information from a group of experts, including credit union officials, who will describe financial literacy, financial inclusion and financial capability initiatives, and available resources.

Under the Federal Credit Union Act, promoting financial literacy is a core credit union mission. While credit unions serve the needs of their members and promote financial literacy within the communities they serve, NCUA works to reinforce credit union efforts, raise consumer awareness and increase access to credit union services. NCUA also participates in national financial literacy initiatives, including the Financial Literacy and Education Commission, an interagency group created by Congress to improve the nation’s financial literacy and education.

Member Deposits Remain Protected up to $250,000 by the Share Insurance Fund

ALEXANDRIA, Va. (March 29, 2016) – The State of Michigan Department of Insurance and Financial Services today liquidated Veterans Health Administration Credit Union of Detroit and named the National Credit Union Administration as liquidating agent.

Public Service Credit Union of Romulus, Michigan, immediately assumed Veterans Health Administration Credit Union’s members, assets, and loans and shares. Public Service Credit Union is a federally insured, state-chartered credit union with assets of $156 million and 23,585 members, according to the credit union’s most recent Call Report.

The new members of Public Service Credit Union should experience no interruption in services, and their accounts remain federally insured by the National Credit Union Share Insurance Fund.  Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.

Members with questions about their loan and share accounts may contact Public Service Credit Union at 734-641-6335 Monday through Friday from 8 a.m. to 7 p.m. Eastern and Saturday from 9 a.m. to 1 p.m. Eastern. Members also may visit the Share Insurance section (opens new window) of NCUA’s MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

The Department of Insurance and Financial Services made the decision to liquidate Veterans Health Administration Credit Union and discontinue its operations after determining the credit union was insolvent with no prospect for restoring viable operations on its own.

Chartered in 1954, Veterans Health Administration Credit Union primarily served employees of the Detroit and Ann Arbor Veterans Administration Medical Centers. At the time of liquidation and subsequent purchase by Public Service Credit Union, Veterans Health Administration Credit Union served 1,297 members and had assets of $2 million, according to the credit union’s most recent Call Report.

Veterans Health Administration Credit Union is the fourth federally insured credit union liquidation in 2016.

Member Accounts Remain Protected to $250,000; Member Services Uninterrupted

ALEXANDRIA, Va. (March 31, 2016) – Montauk Credit Union of New York, New York, has merged into Bethpage Federal Credit Union of Bethpage, New York, effective today, the National Credit Union Administration announced.

The new Bethpage members should experience no interruption in services, and member deposits remain protected by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund also separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States. Members may visit the Share Insurance section (opens new window)of NCUA’s MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

The new Bethpage members can continue to contact the credit union and transact business by telephone at 212-989-5200 or in person at the office located at 111 West 26th Street, New York, New York. Members can also transact business at Bethpage branches. Members can get a list of branches as well as information about Bethpage’s rates and services at the Bethpage website (opens new window).

On Sept. 18, 2015, the New York State Department of Financial Services placed Montauk into conservatorship and appointed the National Credit Union Administration as conservator. The two agencies worked together to address issues affecting the credit union’s safety and soundness. As conservator, NCUA determined that merging Montauk into Bethpage was in the best interests of its members.

Montauk was a federally insured, state-chartered credit union that, prior to the merger, had assets of $162 million and 2,830 members, according to its most recent Call Report. Chartered by the state of New York in 1922, Montauk primarily served individuals in the taxi industry in New York City, Chicago and Philadelphia. Bethpage is a federal credit union with assets of $6.2 billion and 277,429 members, according to its most recent Call Report.

Sound Management Policies, Litigation Strategy Make Future Assessments Unlikely

ALEXANDRIA, Va. (March 31, 2016) – Updated information on the costs of the Corporate Resolution Program and the performance of the NCUA Guaranteed Notes Program is now available online, the National Credit Union Administration announced today.

The upper and lower ends of the projected assessment range for the Temporary Corporate Credit Union Stabilization Fund remain negative, from negative $1.6 billion to negative $3.2 billion, respectively. As long as both ends of the range remain negative, it is unlikely NCUA will charge credit unions future Stabilization Fund assessments.

“Six years, ago, projections of possible Stabilization Fund assessments to credit unions ran as high as $9.2 billion,” NCUA Board Chairman Debbie Matz said. “However, prudent management of the Stabilization Fund, an improving economy and an effective legal strategy have produced a much better long-term outcome for federally insured credit unions. At present, we do not see a need for further assessments, and we will continue our sound management policies and litigation strategy.”

These projections, Matz said, are subject to change based on the performance of the failed corporates’ legacy assets, future legal recoveries and economic variables such as interest rates, unemployment and housing costs. NCUA uses BlackRock, an independent securities valuation firm, to project the future performance of the legacy assets in the NCUA Guaranteed Notes Program.

Credit unions have paid $4.8 billion in assessments since the creation of the Stabilization Fund in 2009. The Stabilization Fund is scheduled to close in 2021. NCUA is still obligated to repay $1.7 billion in outstanding borrowings from the U.S. Treasury. Principal and interest on the NCUA Guaranteed Notes, as well as other obligations of the Stabilization Fund, also must be fully repaid before NCUA can distribute any remaining funds to credit unions.

More information about Corporate Stabilization Resolution costs incurred to date and projected future Stabilization Fund assessments is available online at the Questions and Answers (opens new window)page.

NCUA also has recovered $2.5 billion from the Wall Street firms that sold the faulty mortgage-backed securities to the failed corporate credit unions.  NCUA is using the net proceeds from these settlements to reduce the costs that federally insured credit unions need to pay for the corporate resolution.

NCUA has 12 pending law suits related to faulty securities against underwriters, issuers, trustees and various banks and one suit against various banks that participated in setting the London Interbank Offered Rate.

As part of its overall efforts to promote transparency, NCUA will continue providing periodic updates on the estimates of the costs associated with the Corporate Resolution Program, the performance of the NCUA Guaranteed Notes Program, and the total anticipated assessments credit unions will pay during the life of the Stabilization Fund.

Member Deposits Protected up to $250,000 by the Share Insurance Fund

ALEXANDRIA, Va. (April 5, 2016) – The National Credit Union Administration today liquidated six federal credit unions in the Philadelphia, Pennsylvania, area:

• Cardozo Lodge Federal Credit Union of Bensalem,
• Chester Upland School Employees Federal Credit Union of Chester,
• Electrical Inspectors Federal Credit Union of Bensalem,
• O P S EMP Federal Credit Union of Bensalem,
• Servco Federal Credit Union of Bensalem, and
• Triangle Interests % Service Center Federal Credit Union of Bensalem.

Member deposits at each of the closed credit unions are federally insured by the National Credit Union Share Insurance Fund. Administered by NCUA, the Share Insurance Fund insures individual accounts up to $250,000, and a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund separately protects IRA and KEOGH retirement accounts up to $250,000. The Share Insurance Fund has the backing of the full faith and credit of the United States.

NCUA’s Asset Management and Assistance Center will issue correspondence in the near future to members holding verified share accounts at each credit union. Members with additional questions about their insurance coverage may contact the center *toll-free at 877-715-0777 Monday through Friday between 9 a.m. and 6 p.m. Eastern.* Members also may visit the Share Insurance section (opens new window)of NCUA’s MyCreditUnion.gov (opens new window)website at any time for more information about their insurance coverage.

NCUA made the decision to liquidate the six federal credit unions and discontinue operations after determining the credit unions were insolvent and had no prospect for restoring viable operations.
Cardozo Lodge Federal Credit Union served 83 members and had assets of $226,485, according to the credit union’s most recent Call Report. Chartered in 1960, Cardozo Lodge Federal Credit Union primarily served regular members of the Cardozo Lodge No. 400, Independent Order Brith Sholom, in Philadelphia and employees of Rovner, Allen, Rovner, Zimmerman and Nash who work in Feasterville, Pennsylvania.

Chester Upland School Employees Federal Credit Union served 593 members and had assets of $827,269, according to the credit union’s most recent Call Report. Chartered in 1939, Chester Upland School Employees Federal Credit Union primarily served employees of the Chester Upland School District in Chester City, Chester Township and Upland Borough in Delaware County, Pennsylvania.

Electrical Inspectors Federal Credit Union served 44 members and had assets of $65,894, according to the credit union’s most recent Call Report. Chartered in 1976, Electrical Inspectors Federal Credit Union primarily served active and associate members of the Eastern Pennsylvania Chapter, Eastern Section, International Association of Electrical Inspectors in Philadelphia and employees of Municipal Inspection Corporation who work in Philadelphia.

O P S EMP Federal Credit Union served 85 members and had assets of $1,182,927, according to the credit union’s most recent Call Report. Chartered in 1968, O P S EMP Federal Credit Union primarily served employees of O.P. Schuman & Sons, Inc. who work in Warrington, Pennsylvania.

Servco Federal Credit Union served 795 members and had assets of $2,193,229, according to the credit union’s most recent Call Report. Chartered in 1950, Servco Federal Credit Union served various groups in Delaware, New Jersey, New York and Pennsylvania.

Triangle Interests % Service Center Federal Credit Union served 99 members and had assets of $290,098, according to the credit union’s most recent Call Report. Chartered in 1995, Triangle Interests % Service Center Federal Credit Union primarily served natural person members of Triangle Interests headquartered in Philadelphia.

All six credit unions received management and recordkeeping services from Service Center for Credit Unions, Inc., in Bensalem.

There have now been ten federally insured credit union liquidations in 2016.

Topics Include Bank Secrecy Act, Regulation E, Equal Credit Opportunity Act

ALEXANDRIA, Va. (April 6, 2016) – Credit unions can get an in-depth review of the latest requirements for compliance with the Bank Secrecy Act and other federal regulations on a webinar hosted by the National Credit Union Administration on Wednesday, April 27.

The webinar, “Hot Topics in Compliance,” will begin at 2 p.m. Eastern and run approximately 90 minutes, including a 30-minute question-and-answer session. There is no charge.

Vanessa Lowe, economic development specialist with NCUA’s Office of Small Credit Union Initiatives, will moderate a panel that includes Judy Graham, NCUA program officer; Galynn Wilkins, consumer compliance and outreach analyst with NCUA’s Office of Consumer Protection; and Andre Lucas, director of compliance with the Maryland and District of Columbia Credit Union Association. Our panel will discuss various compliance subjects, including:

• An overview of the Bank Secrecy Act, with discussion of requirements and common violations;
• Monitoring of money laundering;
• Suspicious Activity Reports;
• Equal Credit Opportunity Act adverse action notice requirements; and
• Office of Consumer Protection contact information.

Online registration is available
here. Participants will also use this link to log into the webinar, and they should allow pop-ups from this website. Participants may submit questions in advance at [email protected]. The subject line of the email should read, “Hot Topics In Compliance.” Participants with technical questions about accessing the webinar may email
[email protected]. This webinar will be closed captioned and then archived online
here approximately three weeks following the live event.

NCUA’s
Office of Small Credit Union Initiatives fosters credit union development and the effective delivery of financial services for small credit unions, new credit unions, minority depository institutions and credit unions with a low-income designation.

Agency to Receive $575 Million from Goldman Sachs Settlement

ALEXANDRIA, Va. (April 11, 2016) – With the completion of a settlement with Goldman Sachs, the National Credit Union Administration will have recovered more than $3 billion from Wall Street firms that sold faulty mortgage-backed securities to five corporate credit unions.

NCUA joined the U.S. Department of Justice and other governmental plaintiffs in a $5 billion settlement that includes $575 million to settle NCUA’s claims against the investment firm. The settlement resolves two lawsuits filed by NCUA as liquidating agent for three corporate credit unions—U.S. Central, WesCorp and Southwest—against Goldman Sachs for losses incurred as a result of the purchases of the faulty securities by the corporate credit unions, which later failed.

“Credit unions are benefitting from an aggressive litigation strategy NCUA continues to follow in order to hold responsible parties accountable,” NCUA Board Chairman Debbie Matz said. “NCUA remains committed to fulfilling its statutory responsibilities to protect the credit union system and to pursuing recoveries against Wall Street firms that contributed to the corporate crisis. Our goal is to minimize net losses of the corporate crisis and provide a future rebate to credit unions.”

Net proceeds from recoveries obtained by the agency are used to pay claims against five failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.

NCUA was the first federal financial institutions regulator to recover losses from investments in faulty securities on behalf of failed financial institutions.

Seven years ago, the credit union system faced a crisis when the faulty mortgage-backed securities purchased by five corporate credit unions plunged in value. These losses led to the failure of those corporate credit unions and left the entire credit union system with billions of dollars in losses. When purchased by the failed corporate credit unions, the vast majority of the securities issued by Goldman Sachs had triple-A ratings, but they have since been significantly downgraded.

“NCUA’s Board extends our thanks and appreciation to the attorneys here at the agency and at the Department of Justice who worked closely together to resolve this litigation,” Matz said.

NCUA still has litigation pending against several other financial institutions, including Credit Suisse, RBS Securities, and UBS Securities, alleging they sold faulty mortgage-backed securities to four corporate credit unions: WesCorp, U.S. Central, Southwest and Members United. The agency recently announced it had accepted offers of judgment from Credit Suisse and UBS with respect to litigation filed in New York on behalf of Southwest and Members United, although that litigation has not yet been dismissed. Other claims against those banks remain in Kansas and California. NCUA also has pending litigation against various RMBS trustees and LIBOR banks related to corporate credit union losses.