ALEXANDRIA, Va. – The failure of U.S. Central FCU will trickle down through three-tiered credit union system by erasing more than $1.5 billion of capital held by its 27 member corporates, NCUA announced this morning.
NCUA, the conservator for the credit union central bank, said it has concluded that all $750 million of U.S. Central paid-in-capital and 63% of its $1.25 billion of membership capital shares held by the 27 corporates will be exhausted.
The elimination of this capital will deplete the capital of all the corporates, pushing most of them below NCUA’s minimal capital standards. NCUA Chairman Michael Fryzel said last week the agency will allow corporates to operate temporarily under the capital they reported last November 30, before the takeover of U.S. Central.
NCUA also said this morning that all of the $2 billion of capital held by 1,022 credit union members of WesCorp FCU will be exhausted as well. Most WesCorp members charged off their capital in the troubled corporate in the first quarter.
In its weekly report on the corporates, NCUA said WesCorp lost $5.8 billion at March 31, and U.S. Central $2.3 billion.
