Washington Regulator OK's Holding Visa Stock
OLYMPIA, Wash.-The Department of Financial Institutions cleared state-chartered CUs to receive and hold stock in Visa Inc., as long as they receive DFI approval.
Each state-chartered credit union wanting to participate in the cards giant's initial public offering must submit a written application to the DFI's Division of CUs and the application will be approved, denied or conditioned by the state regulator, the DFI said in a new legal opinion. Hundreds of CUs are in the process of receiving common shares in the Visa IPO. Only those credit unions that are direct members of Visa will receive shares. The IPO is part of a restructuring that will combine the U.S., Canadian and European operations of Visa. Based on a the 2005 IPO for MasterCard- the share price quadrupled in 18 months-the Visa offering, expected early next year, is expected to be one of the hottest of the year.
The Washington regulator said CUs may retain the shares or sell them when they are sellable, a period of three years. But the credit union may not buy or sell additional shares. The regulator said if it determines that holding Visa stock no longer is a "safe and prudent investment" it could order a credit union to divest the shares. State-chartered CUs in Washington are otherwise prohibited from buying or holding common stock. Earlier, NCUA, which bars federal charters from holding common stock, also approved the Visa distribution.
NCUA Seeks To Settle Claims Against Norlarco
FORT COLLINS, Colo.-NCUA is trying to settle claims by credit unions that have purchased almost $200 million of participations in loan pools originated by Norlarco CU, the failed $320-million credit union being auctioned off by the federal regulator. A lawsuit by Superior Choice CU over a $16-million participation acquired from Norlarco has been set aside temporarily while lawyers for NCUA, which now owns the Norlarco loans, negotiates a possible settlement with the Wisconsin credit union, sources familiar with the suit told Credit Union Journal. Superior Choice claims Norlarco is legally obligated to buy back the participations because of misrepresentation of the loans in the participation agreement.
The case of Norlarco, which made more than $240 million of loans in speculative Florida real estate, has entangled dozens of others, with 16 credit unions and two banks holding $170 million of the Florida loans, and other CUs holding millions of dollars of subprime auto loan participations sold by the failed credit union.
The NCUA Board is scheduled to vote in special meeting Dec. 13 on one of three bids to acquire the remnants of Norlarco, which lost almost $3 million in the third quarter and more than $48.3 million for the first nine months of the year. The bidders include Ent FCU, Bellco FCU and Public Service of Colorado CU.
