Testifying before the House Financial Services Committee on December 8, National Credit Union Administration (NCUA) Chairman Debbie Matz provided information about the extraordinary measures that were taken by NCUA to support the credit union system during the financial crisis and Great Recession.
Chairman Matz noted consumer-oriented, member-owned credit union system suffered sizable losses, as a result of the financial crisis. Ninety retail credit unions failed because they were not holding sufficient capital to cover their risks.
Chairman Matz went on to state that the failure of five corporate credit unions had near-catastrophic consequences for all surviving credit unions, causing Congress to create the Temporary Corporate Credit Union Stabilization Fund.
Furthermore, she stated NCUA injected more than $120 billion of emergency liquidity and guarantees to stabilize the credit union system - more than $20 billion in liquidity assistance through the Central Liquidity Facility and over $100 billion in guarantees.
She also pointed out that NCUA borrowed $5 billion from the U.S. Treasury to support the credit union system.
Read the testimony.
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The NCUA did not have $20B in liquidity to provide, they had to have borrowed that also. Which may be why we have heard more than a few times from NCUA that they borrowed over $25 billion.
ReplyDeleteAnd the NCUA didn't really guarantee $100B. They couldn't back that up. That was all the equity in the entire cu system in 2009 (or there abouts)!
How can you guarantee if you can't fulfill, dr Leggett?
NCUA injected?
ReplyDeleteNo, treasury injected.
The size of the insurance fund when the corporate credit unions failed was approximately $7billion.
So, how is it possible that NCUA "imjected" $120billion?
More likely they borrowed $25billion (as Matz has stated on numerous public occasions such as summer of 2014 non-listening sessions) and treasury back stopped $100billion.
Would think you would know this dr Leggett.
How can an agency with such limited financial resources come up with $125 billion.
And by the way, if the losses were so small as CUNA, Filson and NCUA claim, then why was $125 billion needed?
Maybe mcwatters can follow through on his promise to look into the numbers related to corporate credit union bailout.
The amount of guarantees was $100 billion. Remember that NCUA stated that all funds in corporates were federally guaranteed to keep money in them. That is the bulk of the "injection." That $100 billion was not real money but guarantees that kept CUs money in corporates.
ReplyDeleteRight but they didn't have $100B to back up the guarantee. They didn't have 10% of that. So, it WASNT NCUA that guaranteed it.
DeleteAnd it's comical that you ignore that $25B WAS borrowed, and about $2.5B is still owed.
Adding to the comedy, is that funds did keep flowing out of corporates when one considers the entire corporate system is a mere shadow of the former US Central, let alone the whole system at its peak.