New Secondary Market Beckons For CULoans
ALEXANDRIA, Va. - (03/18/05) -- The NCUA Board approved ThursdayCUNA Mutual Group's plan to create a new secondary market formember business loans by buying loans from credit unions, thenselling shares in funds comprised of pools of the loans. CUNAMutual plans to develop additional funds under the program, calledCU System Funds, by purchasing credit card, car, mortgage,community development and other types of loans, according to KevinThompson, vice president for the company's Financial SolutionsGroup. The first fund, which CUNA Mutual has capitalized with $25million, will buy member business loans and is projected to grow toas much as $1 billion in the first three years. The company hasalready purchased $1 million of MBLs from one credit union and hascommitments to buy more from several others. CUNA Mutual plans tobuy credit card receivables from the new credit card bank itchartered, known as Union Financial, and acquire business loansfrom participants in its MEMBERS Business Solutions. The main aimis to expand credit union liquidity by providing a new secondarymarket, while increasing investment options for credit unions,according to Thompson. "This will help keep good creditunion-originated assets within the system and allow other creditunions to benefit," he told The Credit Union Journal.