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New securities issued from legacy assets will be guaranteed by NCUA, said Deputy Executive Director Larry Fazio. The investments will be carefully structured so that incoming cash flow will service outgoing payments to investors, he said.

“We’re not expecting to ever have to make a guarantee payment,” he said. NCUA consulted with the Federal Reserve Bank, U.S. Treasury and bonds experts to estimate future performance, and Fazio said the agency is very confident in its figures. However, should the bonds perform worse than estimated, credit unions would have to fund the shortfall to fund investment payments.

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