Monday, March 22, 2010

To Conserve

NCUA on Friday, March 19th placed $24 million Tracy FCU into conservatorship.

The Federal Credit Union Act authorizes the NCUA Board to appoint itself conservator when necessary to conserve the assets of a federally insured credit union, protect members’ interests or protect the National Credit Union Share Insurance Fund.

Tracy FCU reported a loss of $890,261 for 2009 and was undercapitalized with a net worth ratio of 4.99 percent as of December 2009.

I will be the first to admit that I don’t know all the details associated with Tracy FCU’s conservatorship. However, the absence of any formal enforcement actions on NCUA's website makes Tracy FCU's conservatorship troubling.

It is possible that new information came to light about Tracy FCU since the end of 2009 that necessitated NCUA act quickly to seize control of the institution.

But on Tracy FCU's website is a statement by Valley First Credit Union, which is now running the day to day operations of Tracy FCU, that it anticipates the two credit unions will be merged.

So, is NCUA using its conservatorship powers to force an arranged merger with Valley First Credit Union?


  1. When a credit is placed into conservatorship, does this have any impact to a member's deposits if he has over the NCUA limit?

    I remember when the FDIC placed IndyMac into conservatorship. In that case IndyMac customers who had over the FDIC limits did lose money.

  2. George:

    Excellent question. Maybe some of my readers know the answer about whether members holding funds in excess of the insured deposit limit incur a loss when a CU is placed into conservatorship.

  3. The credit union continues with different management. Thus, funds over insured limits remain on deposit for the member-owner. I would recommend to any member-owner with non-insured funds on deposit to remove them ASAP as a measure of caution. Because Valley First is a California state-licensed credit union and the California regulator is closed on many Fridays (budget issues), maybe there was not enough time for the two sets of regulators to get everything accomplished in a short period of time.



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