NCUA denies U.S. Central Asset Claims from North Dakota Credit Unions
BISMARCK, ND (February 15, 2023) — In a letter to North Dakota credit unions dated February 13, 2023, the National Credit Union Administration (NCUA) once again denied claims made by 28 North Dakota credit unions on $10.5 million in membership capital account (MCA) assets and $3.3 million in paid in capital (PIC) assets recovered from the liquidation of U.S. Central.
North Dakota credit unions were first notified in May 2021 that they would not be included in the distribution of recovered U.S. Central assets due to the liquidation of Midwest Corporate Federal Credit Union (Midwest Corporate) in 2011. Since the Bismarck, North Dakota based Midwest Corporate was the MCA holder of U.S. Central Assets, the NCUA claimed that the owners of Midwest Corporate had no rightful claim, even though a claim certificate for the assets was provided by the federal agency.
“This is very disappointing news,” said Dakota Credit Union Association President/CEO Jeff Olson. “First, what we had was essentially a government forced liquidation through the Corporate Stabilization Program, where corporate owners were forced to choose between recapitalizing after writing off millions in losses the previous year, to merge with another corporate, or to liquidate.”
In their denial letter to the 28 credit unions, the NCUA stated, “…you suggest that Midwest’s claim receipt was transferred to its former shareholders, including your credit union. However, you fail to provide any factual or legal authority in support of that suggestion.”
Olson asserts that North Dakota credit unions are the “collateral damage” from negligence on the part of the NCUA. “Consider the fact – the NCUA handled the liquidation of Midwest Corporate in 2011. The NCUA’s liquidating agent should have known that a claim certificate was issued, and these assets were in the process of being recovered. From our perspective, the NCUA itself and the liquidating agent of U.S. Central are at fault here,” he expounded.
In their denial letter to North Dakota credit unions, the NCUA is providing an appeal process through agency review or judicial determination, both subject to deadlines and additional procedures. Still, North Dakota credit unions are waiting for an answer to what happened to their assets. Did the NCUA keep the $10.5 million; did they distribute the assets elsewhere?
“This is a clear case of obstruction through bureaucratic hurdles and complicated language where the process is the punishment, and does not provide justice,” added Olson.
The credit union trade association, which represents credit unions in both North Dakota and South Dakota, has been spearheading the fight on the asset recovery efforts and has received support from both North Dakota Senator Kevin Cramer, who serves on the Senate Banking Committee, and North Dakota’s Senior Senator John Hoeven. The senators sent a joint letter to NCUA Chair Harper, stating “We encourage you to stay in close communication with the Dakota Credit Union Association as they work through the claims process to ensure all proper claims are satisfied to the greatest extent possible, and that these recovered assets are returned to their rightful owners.”
North Dakota credit unions affected by this latest development will be meeting in the next few days to determine their next course of action.
About Dakota Credit Union Association (DakCU)
The Dakota Credit Union Association (DakCU) is the professional financial trade association serving 69 credit unions that employ more than 2,200 individuals across the Dakotas. With nearly 520,000 members in North and South Dakota, Dakota credit unions have assets exceeding $9.4 billion. In our mission to help credit unions succeed, DakCU plays a key role in growing membership and helping to provide service excellence to members from offices in Bismarck, ND and Sioux Falls, SD. For more information visit our website.