The National Credit Union Administration plans to wash its hands of Puerto Rico's troubled, federally insured liquidity center by the end of May.
Federacion de Cooperativas, in conservatorship since September, will either be liquidated or acquire deposit coverage from Prosad, a commonwealth-chartered insurer, said Timothy McCollum, acting director for the NCUA's southeastern region.
"We don't see a role for NCUA," Mr. McCollum said.
Only 26 of the island's more than 200 credit unions are federally chartered.
Acting as conservator for $60 million-asset Federacion, the NCUA has asked Prosad to insure the corporate at the request of its members.
The regulator will learn Thursday whether the application has been accepted, according to Mr. McCollum. However, he said Puerto Rican government officials have told him the bid will be denied. If it is, the agency will liquidate the institution.
If the corporate is shuttered, Mr. McCollum expects credit unions to transfer deposits to the Banco Cooperativo, a cooperative bank owned by state-chartered credit unions.
But some credit unions are concerned about problems at the cooperative bank. The $100 million-asset institution is $6 million in the red, Mr. McCollum said.
The NCUA, however, believes that the government will back Banco Cooperativo, Mr. McCollum said.
Federacion was seized last year after ignoring orders from the NCUA to rein in its operating costs. The agency also was concerned because that problems suffered by Prosad might have a ripple effect and bring down the corporate.
