NCUA Report - July 2012

STABILIZATION FUND EARNS CLEAN 2011 AUDIT (FROM PAGE 1)

During the year the asset management estates received interest income and proceeds from the sale of NCUA Guaranteed Notes (NGNs), as well as legal settlements from Wall Street securities firms. The asset management estates are the remaining assets and liabilities of the five failed corporate credit unions.

For liabilities, the Stabilization Fund borrowed $3.5 billion from the U.S. Treasury during 2011. NCUA applied these borrowings plus other funds received from the issuance of NCUA Guaranteed Notes and Stabilization Fund assessments to pay off $18.2 billion in Promissory Notes. These transactions, partially offset by asset recoveries, resulted in Insurance and Guarantee Program Liabilities dropping to $2.9 billion.

The auditors’ report did not disclose any reportable conditions on internal controls over financial reporting and on compliance with laws and regulations. As a result of improvements in internal controls, the 2011 audited financial statements were completed six months earlier than the 2010 statements.

Shortly after releasing the 2011 statements, NCUA updated and
expanded the websites that increase public awareness of the
costs of the Corporate System Resolution and the performance
of the NGN Program. These webpages convey complex
information about both programs in easy-to-understand terms.

The webpages now incorporate updated and expanded
material, such as:
n Background on NCUA’s borrowings from and payments
to the U.S. Treasury associated with the Stabilization Fund;
n Graphics on the Stabilization Fund’s Net Position,
compared to anticipated remaining assessments;
n Information on the projected performance of the NGN
Program’s legacy assets, which are the distressed
investment securities from the five failed corporate credit
unions; and
n Updated estimates of projected corporate losses.

NCUA will continue to publish updated information on the Corporate System Resolution and the NGN Program semi-annually over the life of the Stabilization Fund. The webpages are available at www.ncua.gov by going to the tab on “Credit Union Resources and Information” and then clicking on the links for “Corporate System Resolution Costs” and “NGN Program Information.” The Stabilization Fund’s full audited financial statements can be found at http://go.usa.gov/vJu.

ONE SIZE FITS ALL—NOT ANYMORE (FROM PAGE 4)

NCUA recently has begun to take a hard look at how we examine credit unions, so we can better use our resources to focus on those with the greatest risk. That reassessment will help us do a better job, as well as provide regulatory relief for credit unions that may not need the same type of review.

The idea of revisiting one size fits all regs with a goal to tailor regulation to “best fit” the size of the credit union is not an easy task. It will take considerable time and effort. But just maybe it is time to get that task started.