ALEXANDRIA, Va. – NCUA said last evening it has finally shuttered U.S. Central FCU as it transitioned all of the one-time central bank for credit unions’ correspondent services, like ACH services, for corporate credit unions to other providers.
The closure of U.S. Central comes more than three years after the one-time $52 billion corporate was taken over by NCUA and was punctuated by the sale of the U.S. Central offices in Lenexa, Kan., which is being finalized. NCUA has yet to disclose the details of the sale.
The end of U.S. Central represents one of the lowest points in the history of credit unions, with the failure of the corporate credit union for corporate credit unions—or bankers’ bank—helping to trigger the failure of four of its corporate members: WesCorp FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU.
The five failures are projected to cost credit unions as much as $20 billion to resolve, including $5 billion alone for U.S. Central.
U.S. Central was chartered in 1974 to give credit unions access to the Federal Reserve’s payment system and evolved into the central bank for credit unions, providing emergency liquidity to the credit unions system and eventually investment banking services. It was that role that caused its demise as billions in mortgage-backed securities that it bought went bad, with the losses cascading down to its corporate members, prompting the biggest crisis in credit union history. NCUA eventually purchased the MBS owned by U.S. Central and the other four failures-$50 billion worth in total—and has resold them as securitized bonds to public investors as part of its Corporate CU Stabilization program.
