Earlier today, the NCUA met to take action on a number of issues related to the corporate credit union system. The NCUA placed an additional three corporate credit unions into conservatorship: the $7.4 billion Members United Corporate FCU, the $9.5 billion Southwest Corporate FCU and the $1.2 billion Constitution Corporate FCU because they were undercapitalized. These three conservatorships are in addition to 2009 conservatorships of Western Corporate FCU of California and U.S. Central Corporate FCU of Lenaxa Kansas.\ In addition to the conservatorships, the NCUA developed a plan to deal with legacy assets and issued new corporate regulations. The initial step is isolating the impaired securities (legacy assets) held by these five corporates by: • • • •
Repackaging the legacy assets into new securities with a NCUA guarantee; Issuing the new securities to investor on the open market; Transferring performing assets to newly created “bridge banks” that allow for continued operations; and Transitioning operations of the credit unions now under NCUA conservatorships over a target of 24 months to other service providers.
Finalizing a set of stronger regulations that include: • • • •
Stronger capital requirements and Prompt Corrective Action for corporates; Concentration limits on investments that will require corporates to diversify their portfolios; Improved asset-liability management requirements to avoid liquidity and interest rate risks; and Raises governance standards to improve levels of experience and expertise on corporate boards.
Because of the significance these changes have to your credit union, the NCUA has scheduled a free Webinar Monday afternoon from 3 -5 p.m. (EST). The session will also provide an update on the NCUA's plan to resolve corporate legacy assets. Participants may submit questions in advance of the live session. Registration is currently open. Use the resource link below. The LSCU will continue to review today’s actions by the NCUA, and will be providing credit unions with more in-depth analysis of how these changes will be effected, and what they mean for credit unions. NCUA Webinar Registration
Here is the link for the NCUA Media Advisory (Add Link Here)