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NCUA Chairman Todd M. Harper Statement on the Corporate System Resolution Update

March 2022
NCUA Chairman Todd M. Harper Statement on the Corporate System Resolution Update
Todd M. Harper

NCUA Chairman Todd M. Harper

As Prepared for Delivery on March 17, 2022

Thank you, Keith and Brian, for your presentation. And, a special thank you to everyone on the NCUA team, both past and present, for your steady stewardship of the asset management estates of the five failed corporate credit unions and the NCUA Guaranteed Notes initiative. We could not have gotten to this point without your collective efforts, leadership, and wisdom. Thank you again, everyone, for your extraordinary efforts over the last decade.

It has taken us a long time to get here, but we are at long last entering the final phase of the Corporate System Resolution. By pursuing the least-costly resolution of the corporate crisis and taking bold action in court, we have recovered and returned nearly $2.2 billion to member capital account holders — with the potential for more distributions in the months ahead.

Nevertheless, some continue to question our actions. Skeptics of the Corporate System Resolution claim the NCUA overestimated the losses. Others assert that the corporates were merely experiencing a liquidity crisis but were otherwise financially sound. Such sentiments seriously minimize the true nature of the crisis the agency faced between 2008 and 2010.

The five corporate credit unions that failed were insolvent. That is a fact.

Like a gambler busted at the blackjack table, they were out of money. The game was over. Promising the dealer that you will have cash once you win the next few hands does not work in a casino, and it does not work for financial institutions. What came next was the need to resolve these failed institutions in a responsible manner and in a way that did not endanger the entire credit union system, which was under enormous stress during the 2008 financial crisis and its resulting recession.

That is why we structured the Corporate System Resolution to allow the credit union system to bear the costs of these failures over time. Those costs, based on the best information available during that chaotic period, were estimated to be between $13.2 and $16.4 billion.1 That was nearly twice the total assets that were in the Share Insurance Fund at the end of 2008.2

Even our final cost estimate of $9.7 billion is still more than what the Share Insurance Fund had available at the time. And, our final estimate includes the gross recoveries from our legal actions against the firms that sold those faulty securities. Without those recoveries, the estimated cost to the system for the corporates’ failure would have been much, much higher.

And, had the NCUA not taken the prudent steps that it did during the corporate crisis and over the last decade, including pursuing legal action, the credit union system would have had to endure those enormous costs — costs the system simply could not absorb.

We must also acknowledge another factor to the NCUA’s success. Luck. Nothing over the last decade was guaranteed. Nothing.

When we first developed the NCUA Guaranteed Notes, we had no guarantee that investors would purchase these assets. We had no guarantee that the real estate market would recover and that home values would return to and later surpass pre-financial crisis levels. We also had no guarantee of a strong economic recovery following the Great Recession or that the Federal Reserve would keep interest rates at historic lows for so long.

What is more, we had no guarantee that a law firm would pursue legal cases against the financial firms that sold those securities or that a firm would do so on a contingency fee basis, which made taking such legal action even remotely feasible. And, we had no guarantee that these lawsuits would be successful, let alone result in more than $5 billion in gross recoveries to date.

Good fortune, it seems, favors our nation’s credit union system. Why? It’s because all those outcomes occurred — despite the considerable odds. This luck, combined with the incredible talent of the NCUA’s team, the steadfast leadership of previous NCUA Chairmen and Board Members, and the excellent work of our outside legal counsel, is the reason we can report such good news today.

Let’s recognize the Corporate System Resolution for what it really was: an innovative solution that saved the credit union system far more than it cost. While we may never know what the system would have looked like if we had not acted boldly, I do know for certain what would have remained would not be the dynamic, innovative, healthy, and resilient cooperative credit system we have today. And, we would have had considerably fewer credit unions.

As we enter this final phase of the Corporate System Resolution, the NCUA will continue to hold accountable those bad actors who contributed to the corporate crisis, minimize costs, and maximize recoveries and returns. That brings me to my first question. Brian, would you explain our approach to liquidating the remaining assets, so we can maximize potential returns?

Thank you, Brian. Your answer underscores the NCUA’s careful management of these assets and our recovery efforts. My second question focuses on the process of selling these assets. As we wind down these legacy estates, how do the current economic environment and financial market expectations potentially affect our approach to resolving any remaining assets?

That’s good to know. I would like to focus briefly on the lawsuits pursued against bad actors. We were the first federal financial institutions regulator to bring lawsuits against the Wall Street securities firms that sold investments in faulty residential mortgage-backed securities. People told us we could never win. And, some criticized our use of contingency fees. Yet, without these contingency-fee legal actions, would the NCUA have been able to return any money to the credit unions that once owned the failed corporates?

Thank you. And one last question, I know that we just announced a $569 million distribution. But, when might eligible credit unions expect additional payouts?

In closing, the NCUA will continue its fiduciary responsibilities in winding down the remaining asset management estates of the five failed corporate credit unions and return additional funds to capital holders. I encourage all credit unions receiving this windfall to provide safe, fair, and affordable financial services products to the millions of credit union members experiencing economic difficulty, especially to communities of color and those in underserved, low-income, and rural areas. Given the cooperative philosophy at the heart of the credit union movement, credit unions have a moral obligation to step up and help these individuals and communities recover and start anew in the months ahead.

Again, thank you, Keith and Brian, for your excellent work. That concludes my questions and comments. I now recognize Vice Chairman Hauptman.

1 Please see the staff presentation for additional information on cost estimates for the Corporate System Resolution. This information is available at

2 As of the December 31, 2008, the National Credit Union Share Insurance Fund reported $8.24 billion in assets. Please see page 46 of the NCUA’s 2008 Annual Report to Congress, available at In 2011, the Share Insurance Fund Reported $11.67 billion in assets. Please see page 65 of the NCUA’s 2011 Annual Report to Congress, available at

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