BISMARCK, N.D. — Updating member credit unions about NCUA's actions was the first course of business at Midwest Corporate FCU, shared President Doug Wolf, who admitted he was surprised by the news.
Communication to member CUs stressed that NCUA has been clear that it's business as usual at U.S. Central and WesCorp. But Midwest Corporate, one the four corporates not participating in NCUA's expanded guarantee program, is keeping a close eye.
"We are trying to analyze our capital investment in U.S. Central and how that is being affected," Wolf told Credit Union Journal. "Under the conservatorship it was announced that the NCUA believed that the losses at U.S. Central would be larger than previously announced."
If U.S. Central is in worse shape than expected, Wolf said recognizing an impairment on Midwest's books as a result of its investments in U.S. Central will not make Midwest insolvent.
"But it would put us well below the capital standards and we'd have to look at capital restoration. Right now my focus is on trying to make these assessments to protect our members' capital as well as we can."
He said the move to place the two corporates under conservatorship does raise concerns at Midwest, as well as through the rest of the corporates, about further conservatorships. "I don't know if I am overly concerned at his point. I don't think we have any reason not to believe what NCUA is telling us and that their intent is to isolate the largest problems. But both of those corporates had agreements through their deposit guarantee program, and despite having signed those agreements, the conservatorship actions were taken anyway. So I think everyone is a little nervous."
