ALEXANDRIA, Va. – NCUA announced this afternoon it has separated the toxic assets from two of the latest corporate failures, Members United Corporate FCU and Southwest Corporate FCU, and created so-called bridge corporates to continue their services operations as it sells off and liquidates the investments of the two institutions.
The two new bridge corporates will focus only on payment and settlement services, just like the two bridge corporates created by NCUA for U.S. Central FCU and WesCorp FCU to facilitate the liquidation of those two failures. “Creation of the four bridge corporates ensures that 4,600 member credit unions continue to have access to essential liquidity and payment services,” said NCUA Chairman Debbie Matz.
The failures of Members United, a one-time $14 billion corporate located in the Chicago suburb of Warrenville, and Southwest Corporate, a one-time $12 billion institution located in the Dallas suburb of Plano, are estimated to cost credit unions as much as $2 billion to resolve. NCUA said this week it does not have updated loss figures for the two corporates, which it took under conservatorship on Sept. 24.
NCUA has implemented 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.
