Bradenton Herald Logo

Feds seize two large corporate credit unions | Bradenton Herald

×
  • E-edition
  • Home
    • Customer Service
    • Mobile & Apps
    • Archives
    • Buy Photos and Pages
    • Contact Us
    • Newsletters
    • Subscribe
    • Subscriber Services

    • News
    • Crime
    • Local
    • Databases
    • Education
    • Lakewood Ranch Herald
    • Lottery
    • Nation & World
    • Politics
    • Special Projects
    • Submit a News Tip
    • Weather
    • Weird News
    • Blogs & Columnists
    • Breaking News Blog
    • I Am Woman Hear Me Write
    • All Sports
    • Rays
    • Spring Training
    • Bucs
    • High Schools
    • FSU
    • UF
    • USF
    • Outdoors
    • Tennis
    • Blogs & Columnists
    • David Wilson
    • Alan Dell
    • Jason Dill
    • Politics
    • Elections
    • The Florida Influencer Series
    • All Business
    • Real Estate News
    • Retail
    • Small Business
    • Port Manatee
    • All Living
    • Food & Drink
    • Health
    • Pets
    • Religion
    • Blogs & Columnists
    • Cooking With Local Chefs
    • Gulf Coast Cooking
    • Cravings by Janelle O'Dea
    • All Entertainment
    • Arts & Culture
    • Fairs & Festivals
    • Comics
    • Puzzles & Games
    • Horoscopes
    • Restaurants
    • Local Events
    • Movies
    • Music
    • TV
    • Blogs & Columnists
    • Marty Clear
    • All Opinion
    • Editorials
    • Editorial Cartoons
    • Letters
    • Opinion Columns
    • Influencers Opinion
    • Submit a Letter
  • Obituaries

  • Classifieds
  • Jobs
  • Moonlighting
  • Cars
  • Homes
  • Place An Ad
  • Mobile & Apps

  • About Us

Latest News

Feds seize two large corporate credit unions

Mark Davis - Kansas City Star

    ORDER REPRINT →

March 20, 2009 09:40 PM

KANSAS CITY, Mo. — Federal regulators on Friday seized two massive corporate credit unions, with a combined $57 billion in assets.

U.S. Central Credit Union, the nation's largest corporate credit union, is a $34 billion institution based in Lenexa, Kan., a Kansas City suburb. It does not serve consumers directly, but provides services to traditional credit unions that do.

The action does not affect consumers' deposits, which continue to carry federal insurance up to $250,000.

The credit union was placed into a federally controlled conservatorship, which allows the National Credit Union Administration to continue to operate U.S. Central.

SIGN UP

Sign Up and Save

Get six months of free digital access to the Bradenton Herald

SUBSCRIBE WITH GOOGLE

#ReadLocal

The NCUA also seized Western Corporate Federal Credit Union, a $23 billion institution based in San Dimas, Calif., and one of a network of corporate credit unions connected to U.S. Central.

Seizure of the two massive credit unions, with a combined $57 billion in assets, marked the latest dramatic move by federal regulators to prop up the nation's financial system.

"The unprecedented action was necessary to protect not only the assets of the two corporate credit unions, but also to protect the National Credit Union Share Insurance Fund and the interests of credit union members nationwide," NCUA Chairman Michael E. Fryzel said in a statement.

"Only by direct intervention in the daily operations of U.S. Central and WesCorp (Western Corporate) can NCUA implement timely, appropriate and effective strategies to stabilize these corporates and restore member and lender confidence," his statement said.

Regulators said the two credit unions had failed a "stress test" performed on the mortgage- and asset-backed securities at all corporate credit unions. The tests had found "an unacceptably high concentration of risk resided in only" U.S. Central and Western Corporate.

Further deterioration since that test had cut into their liquidity and ability to handle the payment system they operate for traditional credit unions, the NCUA said.

The insurance fund that backs credit union deposits had recently injected $1 billion into U.S. Central to bolster is declining financial condition. The action, along with steps to guarantee regular credit unions' deposits in the corporate network, racked up $4.7 billion in costs that the credit union industry is expected to bear this year.

Federal officials said the cost is now estimated at $5.9 billion.

Despite this burden on credit unions, which will leave some with losses this year, federal officials have said the industry is healthy enough to absorb the added costs.

U.S. Central officials were not available to comment. Previously, CEO Francis Lee issued an open-letter apology to the industry.

"At U.S. Central, we have strived throughout our history to be good stewards of the Corporate Network's funds, investing them in highly rated securities only after conducting pre-purchase analysis and subsequent ongoing scrutiny," Lee wrote. "We deeply regret that we have been unable to avoid the impact of the unprecedented distress in the housing market and its concurrent effect on the mortgage-backed securities in our investment portfolio."

Federal officials have opened an industry review of whether to restructure the network. They've said all options, even possibly dismantling it, will be considered.

U.S. Central's problems stemmed from its investments in what were highly rated mortgage-backed securities. Although U.S. Central officials said the securities continue to pay off as expected, accounting rules forced them to write down the value of those securities dramatically.

Markets for such securities have nearly dried up amid the financial crisis, leaving U.S. Central little value to count. The declines left U.S. Central owing more money to others than its own assets were worth.

Related stories from Bradenton Herald

latest-news

Kansas credit union's woes will cost the entire industry

March 15, 2009 09:58 AM

  Comments  

Videos

Safety tips when you encounter bears, wolves, or moose

Kindergarten teacher cuts hair to match bullied student

View More Video

Trending Stories

State wants to revoke license of charter school principal in Manatee County

February 18, 2019 03:46 PM

Ex-FBI official: ‘Crime may have been committed’ by Trump

February 18, 2019 02:16 AM

3 children among 4 found dead after west Michigan shooting

February 18, 2019 07:56 PM

Homeless guy carried rattlesnake, said he was protecting it from cars, Fla. cops say

February 18, 2019 03:46 PM

DNA testing needed to identify mystery animal that attacked and killed NC teacher

February 18, 2019 07:37 AM

Read Next

Heartland Parkway is the toll road that wouldn’t die. Galvano is leading the latest push

State Politics

Heartland Parkway is the toll road that wouldn’t die. Galvano is leading the latest push

By Craig Pittman Tampa Bay Times

    ORDER REPRINT →

February 19, 2019 08:15 AM

Florida Senate President Bill Galvano, R-Bradenton, called for building a toll road called the Heartland Parkway, from Polk County south to Collier County..

KEEP READING

Sign Up and Save

#ReadLocal

Get six months of free digital access to the Bradenton Herald

SUBSCRIBE WITH GOOGLE

MORE LATEST NEWS

Florida military bases could lose up to $177 million to Trump’s border wall

Politics & Government

Florida military bases could lose up to $177 million to Trump’s border wall

February 19, 2019 08:09 AM
Knight Foundation makes $300 million investment to strengthen local news, accountability

Business

Knight Foundation makes $300 million investment to strengthen local news, accountability

February 19, 2019 05:00 AM
‘It is time to complete that revolution’: Sanders says he’s running for president

Latest News

‘It is time to complete that revolution’: Sanders says he’s running for president

February 19, 2019 07:00 AM
Chanel: Iconic couturier Karl Lagerfeld has died

Latest News

Chanel: Iconic couturier Karl Lagerfeld has died

February 19, 2019 08:47 AM
A Florida cellphone seller owes workers $27,000 in back pay after various violations

Business

A Florida cellphone seller owes workers $27,000 in back pay after various violations

February 19, 2019 06:59 AM
16 states sue Trump over emergency wall declaration

Latest News

16 states sue Trump over emergency wall declaration

February 19, 2019 04:27 AM
Take Us With You

Real-time updates and all local stories you want right in the palm of your hand.

Icon for mobile apps

Bradenton Herald App

View Newsletters

Subscriptions
  • Start a Subscription
  • Customer Service
  • eEdition
  • Vacation Hold
  • Pay Your Bill
  • Rewards
Learn More
  • About Us
  • Contact Us
  • Newsletters
  • News in Education
  • Archives
Advertising
  • Place a Classified Ad
  • Advertise with Us
  • Special Sections
  • Public Notices
Copyright
Privacy Policy
Terms of Service


Back to Story