ALEXANDRIA, Va. — The National Credit Union Administration announced Saturday morning the completion of its liquidation of WesCorp FCU, marking the end of the most costly failure in credit union history.
The failure of the one-time $34 billion corporate, based in the Los Angeles suburb of San Dimas, Calif., is projected to cost credit unions $7 billion, including $2 billion of capital owned by 1,000 credit union members of the failed corporate. The NCUA took over WesCorp, along with U.S. Central FCU, in March 2009, amid mounting losses in the mortgage-backed securities held by the two corporate giants. Three other corporates eventually failed for similar reasons.
The final closing was concluded with the migration of WesCorp's 326 capitalizing members, comprising $50.3 million of capital, to Catalyst Corporate FCU, the Plano, Texas, corporate that is itself the product of another corporate failure, Southwest Corporate FCU.
WesCorp, known since 2010 as Western Bridge Corporate FCU, as the NCUA sought to bridge the huge corporate failure with a final resolution, closed its doors for good Friday night. "The closing of Western Bridge's doors is an important milestone for the entire credit union system," said Debbie Matz, chairman of the National Credit Union Administration, which projects losses around $20 billion for the five corporate failures.
Catalyst Corporate was created by the combination of the remnants of Southwest Corporate and Georgia Corporate FCU. The newly formed corporate is also poised to acquire Arizona's First Corporate FCU, which will make it one of four major surviving corporates, with more than $4 billion in assets and over 1,200 credit union members.