NCUA Charters Bridge CUs (Misc News: October 6, 2010)
The National Credit Union Administration today announced the creation of two bridge corporate credit unions to assume operations of U.S. Central Corporate FCU (US Central) and Western Corporate FCU (WesCorp).
These actions, which were originally announced in conjunction with the unveiling of NCUA’s Corporate System Resolution Plan on Sept. 24, comprise the next phase in the transition of corporate credit unions currently under NCUA conservatorship.
The newly created institutions will be known as U.S. Central Bridge Corporate FCU and Western Bridge Corporate FCU.
“The creation of bridge corporates is an important interim step toward an orderly transition which will allow consumer credit unions to exercise real choice about the
future of the corporate system,” NCUA Chair Debbie Matz said.
NCUA is implementing a “Good Bank/Bad Bank” model to facilitate the corporate resolution process. Bridge corporate credit unions (“good banks”) are chartered by the NCUA Board to purchase and assume “good” assets and member share deposits from the conserved corporate credit unions (“bad banks”). Bridge corporate credit unions will be highly liquid and operated to ensure stability and minimize disruption of service to member credit unions.
Other highlights of the plan include:
- No new service offerings, except in instances where there is a need to enhance the security and functionality of existing services;
- Fields of membership will be identical to those of the conserved credit unions they replace;
- New loans will be provided primarily for settlement purposes and existing loans will continue to be serviced;
- Bridge corporate balance sheets will consist of assets and liabilities sufficient to sustain operational activities of the bridge corporate;
- The bridge corporates will focus on payments and settlement activities. Funding will not be secured to build an asset portfolio above this stated purpose;
- In the interest of continuity of service at bridge corporates, critical staff have been encouraged to transition to the bridge corporate.
NCUA said it is committed to operating the bridge corporates in a way that minimizes disruption of services provided to members. However, it will not operate the bridge corporates indefinitely. Bridge leadership will consult with members to develop a viable long-term plan that would enable the delivery of services transferring the bridge corporate's operations to a newly chartered corporate credit union, or selling operations to another entity capable of providing uninterrupted services NCUA said.
The agency anticipates that the process to shut down the bridge corporates could take up to 24 years.