by Calculated Risk on 9/24/2010 04:51:00 PM

Press Release: NCUA Adopts Reforms for Corporate Credit Union System, Protects Consumers

The National Credit Union Administration today assumed control of three undercapitalized corporate credit unions, announced a plan to isolate the impaired assets in the corporate credit union system, and finalized a set of stronger regulations - key elements in its efforts to resolve the financial challenges facing corporate credit unions without disrupting consumer service.
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Setting the plan into motion required conservatorship today of three additional corporate credit unions that are not viable: Members United Corporate Federal Credit Union of Warrenville, Illinois; Southwest Corporate Federal Credit Union of Plano, Texas; and Constitution Corporate Federal Credit Union of Wallingford, Connecticut. In 2009, U.S. Central Corporate Federal Credit Union of Lenexa, Kansas, and Western Corporate Federal Credit Union of San Dimas, California, were also placed into conservatorship.

The WSJ reports:

Friday's moves include the seizure of three wholesale credit unions and an unusual plan by government officials to manage $50 billion of troubled assets inherited from failed institutions. To help fund the rescue, the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.

These "corporate credit unions" don't serve the general public - they are owned by the "natural person" credit unions - and all the "natural person" money held at these corporate credit unions was guaranteed early last year. But this is another $50 billion in "troubled" assets that will need to be worked through.