Tuesday, October 5, 2010

NCUA Creates Two Bridge Corporate CUs

The National Credit Union Administration announced the creation of two bridge corporate credit unions to assume operations of U.S. Central Corporate Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp). The new entities will be known as U.S. Central Bridge Corporate Federal Credit Union and Western Bridge Corporate Federal Credit Union.

NCUA has been running US Central and WesCorp, since placing them into conservatorship on March 20, 2009.

The creation of these two bridge corporate credit unions is part of NCUA's "Good Bank/Bad Bank" model for resolving the toxic assets held by the corporate credit union system.

The bridge corporate credit unions (“good banks”) will purchase and assume “good” assets and member share deposits from the conserved corporate credit unions (“bad banks”).

NCUA stated that the new bridge corporate credit unions will not be able to add new services, will not be able to accept new members, and will focus on payment and settlement services.

Additionally, bridge corporates will not offer investment products other than short-term certificates. The maturities for term deposits will be restricted to 180 days or less. Investments will be restricted to cash held in correspondent accounts or Treasury and Federal Agency Security with maximum (bullet) maturities of 180 days.

NCUA stated that these bridge corporates will have a limited life span, probably no more than 24 months. NCUA believes that this will give the members of the bridge corporate credit union enough time to either charter a new corporate credit unions or sell the operations to another entity.

1 comment:

  1. The NCUA had originally intended to use a "Good Credit Union/Bad Credit Union" model but had to discard the idea. There is no such thing as a bad credit union. There are only bad banks.



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