U.S. seizes 3 credit unions
Government plans to repackage and sell about $50 billion in troubled assets.
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.