ALEXANDRIA, Va. – NCUA has rejected ongoing plans to combine two or more of the four failed corporate credit unions – surviving now as so-called bridge corporates – to create a single entity with a nationwide reach.
NCUA Chairman Debbie Matz said in a new policy statement issued Friday the agency worries that consolidation of two or more bridge corporates could create a new entity that would pose new systemic risk concerns for NCUA, as well as create “unfair market advantage.”
“The NCUA Board is aware that some Bridge Corporate members are promoting a new charter consisting of consolidated bridge corporate assets, facilities and personnel as the preferred direction to transition out of conservatorship,” Matz said. “Such consolidations would only be considered after the bridge corporates transition to independently operated corporates.”
The four bridge corporates were created by NCUA after it liquidated the massive investment portfolios at failed corporates U.S. Central FCU, WesCorp FCU, Members United Corporate FCU and Southwest Corporate FCU. The bridges currently perform a number of back-office functions, including payments services, for more than 4,600 credit unions.
The statement is the second in a week released by NCUA expressing concerns about creation of new corporate entities that would pose “too big to fail” risks for NCUA. Earlier last week, NCUA distributed a Letter to Credit Unions referring to plans for a major consolidation of the corporate system or a nationwide payments CUSO that would concentrate resources. Such a concentration of services or the aggregation of service volumes in one entity, said NCUA, would introduce systemic risk that may create an unacceptable “too big to fail” scenario.
