U.S. Central and Western Corporate Update

U.S. Central and Western Corporate Update
Randall C. Smith, Managing Editor

The NCUA placed U.S. Central and Western Corporate Credit Union into conservatorship to stabilize the corporate system and clear up balance sheet issues. The action was predicated on both due to credit losses the exceeded capital which impaired liquidity to retail credit unions without government support. This action also removes obstacles for the NCUA to take actions to protect retail credit union deposits and the interests of the NCUSIF.

As a result of the NCUA’s conservatorship board and senior management changes have taken place at both corporates as mandated by the NCUA. During the NCUA’s webinar updating the corporate stabilization plan, Executive Director David Marquis announced that you can“completely take out PIC and member capital accounts, and still leaves a rather sizable hole, which we will cover.”

Rating agency, Fitch affirmed the Issuer Default Rating on eight corporate credit unions yesterday based on NCUA actions. With the NCUA statement and action taken, Fitch expects support to be coming that will allow the corporates to operate at current rating levels.