ALEXANDRIA, Va. – The NCUA Board this afternoon approved several steps aimed at stabilizing the troubled corporate credit union network, which is struggling to cope with more than $18 billion of unrealized losses on corporate investments.
The rescue plan will guarantee all uninsured shares in the corporates; provide a $1 billion emergency infusion of capital to U.S. Central FCU; and declare a premium on the National CU Share Insurance Fund in order to raise new funds for the system.
The guarantee of uninsured shares will run through at least February in an effort to stem a run on the corporates that has been in effect for the past year. It may be extended until the end of 2010.
The emergency loan to U.S. Central will help provide reserves to offset anticipated losses on U.S. Central’s vast portfolio of mortgage backed securities. U.S. Central has reported $10 billion in unrealized losses on its investments, most of it on mortgage-backed and other asset-backed securities.
The Board also issued for comment a proposed rule that would restructure the corporate system.
