Posted on 09/24/2010 5:15:00 PM PDT by Brilliant
Two years after the peak of the financial crisis, the federal government swooped in to stabilize a crucial part of the credit-union sector battered by losses on subprime mortgages.
Regulators announced Friday a rescue of the nation's wholesale credit unions, underpinned by a federal guarantee valued at $30 billion or more. Wholesale unions don't deal with the general public but provide essential back-office services to thousands of other credit unions across the U.S. The majority of retail credit unions are sound, but they are exposed to the losses through the industry's insurance fund.
Friday's moves include the seizure of three wholesale credit unions, plus 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...
Previously, we stabilized the system, and now we're resolving the problem and reforming the system," said Debbie Matz, chairman of the National Credit Union Administration...
Members United Corporate Federal Credit Union in Warrenville, Ill., Southwest Corporate Federal Credit Union of Plano, Texas, and Constitution Corporate Federal Credit Union, Wallingford, Conn., which had a total of $19.67 billion in assets as of July, were taken into conservatorship by federal regulators...
Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets.
But some chased higher returns by loading up on securities backed by subprime mortgages or other risky loans. Their portfolios were decimated by the mortgage meltdown...
Losses on the mortgage-backed securities held by the five seized credit unions are expected by regulators to total about $15 billion...
(Excerpt) Read more at online.wsj.com ...
Who’s getting bailed out next?
you didnt think all that money was for jobs and the American people did you....unions spent to get their candidates elected and new gold courses. so now they are broke. Tax payers owe them for pricing us out of the job market.
Whomever holds option arm and alt-a paper that goes bad, That is the stuff that is resetting now. There is another year or so to go on those resets.
But if I am not mistaken their is a credit union here in MI holding their own paper and will not do 30 yr fixed, only 15 ( DFCU )..........
Perfect ending to recovery summer...
I’ve been watching my own credit union like a hawk, To their credit, they’ve been very conservative and cautious, reduced their mortgage portfolio by half in 2007, ceased mortgage lending entirely for over a year, and are now cautiously re-entering the market with stringent underwriting regardless of how good the FICO score is, and 30% down payment. Never did get into the ARM madness, so that exposure is nil.
So has mine. They're currently rated at 5 stars by Bauer and 4 by Bankrate.
They were forced by the NCUA to help bail out their own wholesale CU to the tune of over $1M. Don't know the terms of repayment.
Bailouts delay the Recovery by delaying the crash. Gotta hit bottom and clean up before we can rebound.
This was by design, to put the final “consumer level” banking component under Federal Control, so when the Reichstag Moment hits, they can seize all assets....
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