ALEXANDRIA, Va. – NCUA on Friday night took both U.S. Central FCU and WesCorp FCU under conservatorship, the biggest federal takeovers in credit union history.
The move comes as the two corporate credit union are reporting growing losses on their vast portfolios of mortgage securities. U.S. Central, which reported a loss of $1.1 billion for 2008, reported yesterday that unrealized losses on its securities continued to rise last month to $10.5 billion, even after it charged-off $1.2 billion of holdings in December.
WesCorp, which claims more than $24 billion in assets, has wracked up more than $3 billion in unrealized losses on its investments.
NCUA Chairman Michael Fryzel told The Credit Union Journal Friday night they have removed the board and management of both corporate giants and are running them under conservatorship. "We no longer have confidence in the management and are now running them both," Fryzel said.
NCUA has already infused $1 billion into U.S. Central as part of a $5 billion corporate bailout.
