When is an IOU not an IOU?
That was the question on the mind of Mike Doland, executive vice president at ABNB FCU in Virginia, when he advised the credit union’s vice president for finance, Anthony Duncan, to send a letter to the Central Liquidity Facility, the federally operated organization overseen by the NCUA that has about $1.7 billion on hand, all of it cash coming from credit unions.
"Please allow this letter to serve as a formal request to redeem ABNB capital stock from the Central Liquidity Facility," Duncan’s letter said.
"It is my understanding each corporate sent an equivalent amount to U.S. Central, as the ‘group agent.’ U.S. Central subscribed to the required capital stock and gave all credit unions access to the Central Liquidity Facility. Furthermore, this capital stock is redeemable upon demand by the members. Please send the funds to: ABNB Federal Credit Union," the letter concluded.
And then what happened?
Doland told Credit Union Times that a few days after sending the letter, ABNB got a telephone call from a CLF employee who left a voice mail that said, "Received letter from Tony Duncan to redeem capital stock. There must be a misunderstanding."
The bottom line of the message to ABNB, according to Doland, don’t hold your breath, the money is not coming to you.
Asked to comment on these events, NCUA spokesperson David Small responded via email. "US Central, as an agent group representative, purchased stock on behalf of all the natural person credit unions which are members of its respective corporate credit union membership that are not regular (direct) members of the facility. The stock is owned by USC and the purchase was funded entirely by USC. No money was advanced from any of the beneficiary natural person credit unions or the respective retail corporates through which their CLF membership is conferred. In other words, no retail corporate or any of their member natural person credit unions within the CLF agent group will receive proceeds from redeemed agent member stock. All of the money will go to U.S. Central Bridge."
"There have been some incorrect statements made in the press telling credit unions they should ask for their pro rata share of any redeemed stock. It simply isn’t the case," Small said.
Credit union consultant Marvin Umholtz, who has kept close tabs on the CLF saga, said this latest sequence of events makes the reality plain. "Ownership in the CLF is just a myth, it’s a construct without reality. The real owner is the NCUA board," he said.
For his part at ABNB, Doland said he is not ready to give up on his credit union’s quest for what he sees as its share of the CLF money. "This is a sizable enough amount of money for me to turn this over to an attorney. I am willing to push the point. I want our money back. The money belongs to my members."