NCUA Conserves Three More Corporates, Allows for NCUA to Address Legacy Assets

Sept. 27, 2010 — With the conservatorship of three more federal corporate credit unions, the National Credit Union Administration now controls a majority of the corporate system's other than temporary impairments (OTTI), allowing the agency to implement its legacy assets plan.

The NCUA is now the conservator of five federal corporate credit unions, U.S. Central and WesCorp, as well as Constitution Corporate, Southwest Federal and Members United.

The agency's "Corporate System Resolution Plan" or legacy assets plan is fashioned after the good bank/bad bank model. A bridge charter for each of the conserved corporates will be established to maintain the operations and personnel, and an asset management estate will handle the sale of the securities.

The NCUA has set a target of two years for the bridge charters and sale of the securities, and during that time, the corporates will not be recapitalized. However, operations will be maintained and the agency expects no interruption in payments systems.

The agency estimates the total corporate stabilization cost to the credit union system is within the range of $13.9-$16.1 billion, with $5.6 billion depleted and $1.3 billion in assessments already paid from earlier this year. That leaves $7 - $9.2 billion left for assessments to pay off the now extended Temporary Corporate Stabilization Fund established with the U.S. Treasury.

The NCUA developed a resource page on its website explaining the legacy assets plan and other corporate stabilization activities at this link.