2 corporate credit unions taken over by government
Yahoo! News reports:
Federal regulators on Friday seized control of two large institutions that provide wholesale financing for U.S. credit unions, a move they say was needed to stabilize the credit union system.
The National Credit Union Administration said it has taken over and put into conservatorship the two corporate credit unions, U.S. Central Federal Credit Union, based in Lenexa, Kan., and Western Corporate Federal Credit Union, in San Dimas, Calif. U.S. Central has about $34 billion in assets while Western Corporate, known as WesCorp, has an estimated $23 billion in assets.
A conservatorship enables the government to operate a financial institution. Corporate credit unions provide financing and investment services to the much larger population of retail credit unions. Some of the 28 corporate credit unions in the U.S. have sustained steep losses on paper from the depressed value of the mortgage-linked securities they hold.
It’s another big, distinctly un-American step taken by the federal government. Taking over entire credit unions was long deemed extraordinary, socialist even. Today, however, it is reality.
Whether it’s useful or not is a question I can’t answer. We should know more about this companies and we need to know exactly what their collapse would do to the economy. Would it bring about major chaos, or would its impact be limited?
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