Wednesday, November 23, 2011

Liquidating Western Bridge

NCUA is currently in the process of soliciting bids to acquire the assets and business lines of Western Bridge Corporate Federal Credit Union (San Dimas, CA). NCUA expects the selection process to be completed by the end of 2011.

I have heard from a reputable source that NCUA discouraged banks with large correspondent banking operations from bidding on Western Bridge. By doing so, NCUA has probably increased the cost to the Temporary Corporate Credit Union Stabilization Fund associated with Western Bridge's liquidation.

As of August, Western Bridge reported holding $10.5 billion in assets. No other corporate credit union is close to Western Bridge in size. Therefore, a corporate credit union acquiring all of Western Bridge would experience a substantial dilution of its net worth ratio. On top of that, NCUA's new corporate credit union regulations will make it more difficult for a corporate credit union to generate the returns needed so that this investment would exceed any hurdle rate.

As a result, it is unlikely that Western Bridge can be sold intact. If Western Bridge is broken up and sold off in pieces, NCUA will not fetch as high a value for the assets and operations of Western Bridge.

So, by excluding banks from the bidding process that could have acquired the entire corporate credit union, NCUA has potentially raised the cost on all credit unions associated with the liquidation of Western Bridge's failure.
Posted by at
Labels: ,

3 comments:

  1. AnonymousNovember 25, 2011 at 1:48 AM

    Your premise is wrong. With many credit unions signing onto pledges to abandon Western Bridge if acquired by banking interests, the value is gutted.

    ReplyDelete
  2. AnonymousNovember 26, 2011 at 12:01 AM

    Keith - You are correct. The NCUA restricted bids to other corporate credit unions. They eliminated capitalism by eliminating competitive bidding from other interested parties. So again the natural person credit unions will get stung again with another corporate credit union assessment courtesy of the NCUA. The NCUA had an opportunity to get competitive bids and squandered the opportunity. What part of this should surprise any of us when it comes to common cents at the NCUA!

    ReplyDelete
  3. AnonymousNovember 29, 2011 at 9:07 AM

    *sense

    ReplyDelete

Subscribe to: Post Comments (Atom)
 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.