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Federal NCUA Seizes 3 Corporate Credit Unions

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The National Credit Union Administration (NCUA), the independent federal agency that supervises federal credit unions, seized three corporate credit unions on Friday, as reported by Credit Union Times. Members United Corporate FCU of Warrenville, Ill., with assets of $7.4 billion; Southwest Corporate FCU of Plano, Texas., with assets of $9.5 billion; and Constitution Corporate FCU of Wallingford, Conn., with assets of $1.2 billion, were all placed in conservatorship.

Top management and volunteers were let go from each of the three; executives and boards will be replaced.

Together with U.S. Central FCU and Western Corporate FCU, the three seized credit unions own all the securities that make up NCUA’s $50 billion legacy assets plan. Losses on mortgage investments threatened all three; those $50 billion in investments will be repackaged, and $35 billion in investments will be sold to private buyers with a government guarantee.

Since March of 2009, NCUA has taken over five of the largest wholesale credit unions, the two largest last year, as reported by Associated Press. Those five accounted for 70% of corporate credit unions’ total assets, and 98% of assets that went down in value.