Corporate CUs — The Road Behind & What's Ahead
WEST PALM BEACH, Fla.-In 2007, credit unions were slowly coming to grips with an emerging reality they weren't immune from a faltering economy and a housing bubble that was bursting with a bang.
Claims that "we didn't make those kinds of subprime loans" were quickly proving irrelevant: corporate credit unions had invested heavily in pools of such loans, and soon natural-person CUs were becoming familiar with abbreviations such as CMOs and MBS, and the devastating effect both will have on another of those abbreviations, PIC.
By early 2009 NCUA was placing into conservatorship two of the biggest corporates U.S. Central and Wes-Corp, and ongoing losses since that time have led to "special assessments" by NCUA, wiping out earnings at many CUs, pushing some into PCA.
With most corporates operating with little to no capital, and with NCUA unveiling new rules later this year that many predict will lead to a "new business model" for corporates, in this issue Credit Union Journal asks, "How did we get here? What led to the corporate meltdown? Who is to blame, if anyone? And what could be ahead?"