NCUA Plans Securitization of Toxic Assets from Corporate CUs (Misc News: September 21, 2010)
NCUA is finalizing its plan to gather as much as $50 billion in troubled assets held by corporate credit unions and securitize them for sale on the market.
In remarks this morning, NCUA Chair Debbie Matz said the credit union regulator is struggling with accounting issues that would require the agency to realize any losses on the sale of the securities.
Most of the toxic assets are held by two large corporates, WesCorp FCU, which was a $34 billion corporate in San Dimas, Calif., and U.S. Central FCU, the one-time $52 billion corporate in Lenexa, Kan. Most of the troubled assets are private label mortgage-based securities.
Matz said new rules the NCUA will consider later this week will bar corporates from investing in private label MBS and set strict limits on concentrations of assets. Both WestCorp and U.S. Central had large concentrations of their portolios tied up in the once-lucrative MBS. The new rules will raise minimum capital levels for corporates and set new restrictions on risk and liability management and board governance.
(Full CU Journal story)