U.S. seizes 3 credit unions

Govern­ment plans to repack­age and sell about $50 bil­lion in trou­bled as­sets.

Los Angeles Times - - Business - reuters

washington — U.S. reg­u­la­tors seized three cor­po­rate credit unions Fri­day and will repack­age about $50 bil­lion in trou­bled as­sets to sell on the open mar­ket.

The Na­tional Credit Union Ad­min­is­tra­tion said the three cor­po­rate credit unions, which pro­vide clear­ing ser­vices to re­tail credit unions, were crit­i­cally un­der­cap­i­tal­ized.

Bar­clays Cap­i­tal will man­age the se­cu­ri­ti­za­tion plan, the reg­u­la­tor said, adding that a se­cu­ri­ti­za­tion trust will be cre­ated to is­sue guar­an­teed notes backed by the U.S. govern­ment.

NCUA Chair­man Deb­bie Matz said the agency also put in place Fri­day reg­u­la­tions re­quir­ing cor­po­rate credit unions to hold higher lev­els of cap­i­tal and set­ting risk lim­its.

The seizure of the three cor­po­rate credit unions comes af­ter the NCUA last year took over two other such in­sti­tu­tions, cit­ing a crit­i­cal de­te­ri­o­ra­tion in their fi­nances.

Cor­po­rate credit unions are the re­tail credit unions’ credit union, pro­vid­ing ser­vices in­clud­ing lend­ing and check and pay­ment clear­ance ser­vices.

Cor­po­rate credit unions have ex­pe­ri­enced more trou­bles than their re­tail coun­ter­parts be­cause they did not face the same re­stric­tions on per­mit­ted in­vest­ments, lead­ing to big losses in cer­tain se­cu­ri­ties dur­ing the fi­nan­cial cri­sis.

The in­sti­tu­tions seized Fri­day were Mem­bers United Cor­po­rate Fed­eral Credit Union of War­renville, Ill.; South­west Cor­po­rate Fed­eral Credit Union of Plano, Texas; and Con­sti­tu­tion Cor­po­rate Fed­eral Credit Union of Walling­ford, Conn.

The NCUA in­sures credit union and con­sumer de­posits up to $250,000 per ac­count.

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