Posted on 03/20/2009 4:46:50 PM PDT by edpc
In the latest dramatic move by federal authorities to prop up the nation's banking system, regulators late Friday seized control of the two largest wholesale credit unions in the U.S. after finding that their losses on mortgage-related securities were even larger than previously thought.
(Excerpt) Read more at online.wsj.com ...
Can you list what the names of the credit unions are?
I just heard this discussed on CNBC. They failed the “stress test”...but they are corporate credit unions, and shouldn’t affect day to day operations of the regular credit unions that serve the public.
Media Release - NCUA Conserves U.S. Central and Western Corporate Credit Unions
http://www.freerepublic.com/focus/f-news/2211118/posts
same subject, with posting from NCUA aite....
Thanks.
From the link on Drudge.
“The National Credit Union Administration said Friday it has taken over and put into conservatorship the two corporate credit unions, U.S. Central Federal Credit Union, based in Lenexa, Kan., and Western Corporate Federal Credit Union, in San Dimas, Calif.”
Obama currently behind closed doors negotiating a deal for purchase by George Soros.
U.S. Central Corporate Federal Credit Union and Western Corporate
CU takeover is a bit complicated.
Technically, a CU is owned by its members.
I forget how this works, been awhile since I have seen one.
This definition is reasonably accurate. I’m a board member of a small credit union.
http://en.wikipedia.org/wiki/Credit_Union
Differences from other financial institutions
Credit unions differ from banks and other financial institutions in that the members who have accounts in the credit union are the owners of the credit union[15] and they elect their board of directors in a democratic one-person-one-vote system regardless of the amount of money invested in the credit union.[16] A credit union’s policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself.[17] Credit unions offer many of the same financial services as banks, often using a different terminology; common services include: share accounts (savings accounts), share draft (checking) accounts, credit cards, share term certificates (certificates of deposit), and online banking.[18] Normally, only a member of a credit union may deposit money with the credit union, or borrow money from it.[19] As such, credit unions have historically marketed themselves as providing superior member service and being committed to helping members improve their financial health. In the microfinance context, “[c]redit unions provide a broader range of loan and savings products at a much cheaper cost [to their members] than do most microfinance institutions.”[20]
Don't they usually look to MERGE with another CU? But if the CU is showing a negative balance, I would not want that CU to merge with MY CU!
A bank could consider buying another failed bank as a marketing risk or investment risk. Not sure how it works for a CU “buying” another CU.
Who gets paid?
Not the stockholders.
Maybe the Govt. eats the bad debt and the good assets are merged?
The mainstream finance MSM is finaly getting a bit of a “hint” about Obama after ignoring him and what not electing him. Now it’s up to the nation to call to help them or help Obama/Congress, although I am not quite sure of their repent and their shame seems too strong.
Banker fury over tax ‘witch-hunt’
http://www.ft.com/cms/s/0/4ff2f77e-1584-11de-b9a9-0000779fd2ac.html
AIG bonus outrage has employees living in fear
http://apnews.myway.com/article/20090320/D9720I901.html
They would be "merged" or sold to another credit union, but not a 'bank.' Totally independent systems. They do not mix.
Don't they usually look to MERGE with another CU? But if the CU is showing a negative balance, I would not want that CU to merge with MY CU!
The NCUA (the CU version of FDIC) would dictate terms, most likely. Not likely would two weak CUs be merged.
Who gets paid? Not the stockholders. Maybe the Govt. eats the bad debt and the good assets are merged?
Deposits are insured up to 250K. There is no stock or equity in a credit union. The 'owners' of a credit union are the members. All profits are returned to the members via better loan rates or savings earnings.
I would imagine if a merger were to happen, the failed credit union's depositors would be paid off and the bad loans would be transferred to the combined entity at some reduced value. The new entity would try to collect what they could on those loans. The NCUA eats the loss.
Thanks!
But some FReepers tell us how much stronger CUs are than Banks or S&Ls.
Let me add that our little organization ($12 million in assets)is an antique. We do not sell our loans. We don’t do checking, credit cards, ATM’s, etc. All we do is savings accounts, IRAs, car and boat loans, signature loans, and home loans.
There aren’t too many like us any more. The board (mostly old white guys) wants to keep it old fashioned. We offer the extra service of working with members that get in a jam if they’ve been loyal and good customers.
An ‘NCUA’ Friday ping
U S Central Corporate is the mother of all credit unions formed to be a clearing house and credit union bank for regular credit unions also to provide guidance and advice to member credit unions on investments. As I remember all credit unions are required to park a percent of their reserves with this credit union.
To have this credit union fail is indeed serious.
That is not correct. None of the assets in our organization is in US Central.
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