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Credit union victim of soured mortgage market
KANSAS CITY (Reuters) - Regulators worked on Saturday to assess troubles at the largest U.S. corporate credit union with the aim of keeping liquidity flowing through the nation's 7,800 credit unions.
A new chief executive will take charge on Monday at U.S. Central Federal Credit Union following seizure by regulators on Friday. The institution, with $34 billion in assets, provides settlement services used by more than 90 percent of all U.S. credit unions, which are member-owned lending institutions.
The National Credit Union Administration, or NCUA, took control of U.S. Central as well as Western Corporate (WesCorp) Federal Credit Union of San Dimas, California, another corporate credit union with $23 billion in assets.
"We took action to protect the assets, the share insurance fund and its members," NCUA regional director Keith Morton said in an interview from the Lenexa, Kansas, headquarters of U.S. Central, where he and other officials were working on Saturday.
VII. YOU DON'T GET IT
The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.
In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.
God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.
As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.
"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"
But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.
Good luck with that, America. And enjoy tax season.
The plummeting price of milk that's bringing relief to consumers is also strangling the state's dairy farmers.
As consumers bargain-hunt for milk under $2.50 a gallon, farmers are trucking cattle to slaughter, selling land for cash and trying to renegotiate loans with banks. Several dozen dairy farms in North Carolina are expected to go under this year, accelerating a 50-year trend of the dwindling dairy farm.
"It's really dead serious now," said Pete Strickland, who has raised Holstein cows on 300 acres for more than more 50 years in Nash County. "If milk goes back to $5 a gallon by fall, we don't need to hear [any complaints] from the consumer, because they're putting us out of business."
Express News San Antonio -133
Wausau Financial Sys. -24
FPL Foods LLC -5%
LDS Test and Measurement -51
Ft. Wayne Indiana Schools -50
Staff Development For Educators -27
Grand Sierra Resort In Reno -50
Wilson County NC Unemployment 12%
C.R. Onstrud Inc. -15
Hawaii Feb. Layoffs -1,200
Ohio Unemployment Rate 9.4%
Winnebago County -70
Parkdale Mills Closing Plant -75
Rea Magnet Closing Plant -85
Finning Canada -69
Amaze Entertainment/Evri Make Cuts
Wm. Wrigley Jr. Co. -10%
U.S. Postal Service -1,400
Wash. DC Needs To Cut -1,600
Denver Post Plans Cuts -200
Italy Layoffs First 2 Months '09 -560,000
To do an "AIG" on someone is to defraud,bamboozle,bilk,or beguile, others of your real intentions after they have come to your assistance in your time of need.
“Of all the things that Washington has put together to get us out of this financial mess, I think what happened Wednesday is probably the most important,” says Ed Yardeni, an economist who heads Yardeni Research in Great Neck, N.Y. “This affects so many people.”
But markets have shown that the Fed’s attempts to energize the economy don’t always work as intended. The Fed has already slashed its own short-term interest rate virtually to zero during the past year and has introduced a range of large, innovative programs to get credit flowing again. Yet turmoil in credit markets has persisted, and job losses have mounted.
U.S. May Revamp Credit Unions After Seizing 2 Corporate Lenders
March 21 (Bloomberg) -- U.S. regulators may rebuild the network that helps fund retail credit unions after seizing two corporate lenders with $57 billion in assets to halt an erosion of liquidity.
The National Credit Union Administration, regulator of a banking network for 90 million customers, yesterday took over U.S. Central Federal Credit Union, in Lenexa, Kansas, and Western Corporate Federal Credit Union in San Dimas, California. So-called stress tests at both lenders found an “unacceptably high concentration of risk” from mortgage-backed securities, the agency said in a statement.
“We knew if these securities continued to lose value we’d have to put these corporates into conservatorship,” Chairman Michael Fryzel said in a telephone interview. A “reconstruction of the entire corporate system might be necessary.”
The U.S. has 28 corporate credit unions, which make loans and provide other services to the more than 7,800 credit unions that cater to the public. This is the first corporate credit union seizure since 1995, when the regulator took control of Capital Corporate, based in Landover, Maryland.
“This is a result of the cooperative system we have,” said Fred Becker, president of the National Association of Federal Credit Unions, an Arlington, Virginia-based trade group. “The issue is that some of the credit unions don’t need corporates anymore.”
Credit-union losses may be $10.8 billion to more than $16 billion this year, and a “deep freeze in the number of corporates and their activities” may be needed, Fryzel said yesterday. The regulator in January approved emergency asset guarantees amid mounting losses from mortgage-backed securities.
U.S. Central has about $34 billion in assets and serves 26 other corporate credit unions. In January, it received a $1 billion federal injection to shore up public confidence. Western Corporate has $23 billion in assets and about 1,100 retail credit union members, the NCUA said.
The two seizures may cost the agency’s insurance fund about $1.2 billion, spokesman John McKechnie said yesterday. The regulator’s insurance fund has been drained by $5.9 billion for the takeovers and emergency steps in January, Fryzel said.
The regulator is seeking $30 billion in emergency borrowing authority from the Treasury Department to combat mounting losses. The U.S. House of Representatives has approved expanding its credit line to $6 billion from $100 million.
“Service continues uninterrupted at both” lenders, the NCUA said in its statement. “Members are free to make deposits and access funds.”
U.S. credit union profits plunged 48 percent in 2008 from a year earlier on mounting losses related to mortgage-backed securities and loan delinquencies. Net income for the 7,806 federally insured credit unions was $2.44 billion compared with $4.65 billion in 2007, the NCUA said last month.
March 22 (Bloomberg) -- The Obama administration will this week outline regulatory changes aimed at avoiding a repeat of the financial crisis that’s crippled the banking system and pushed the U.S. into the deepest recession since 1982.
The proposals will address the risks that remain in financial regulation, an administration official said, including the need for an agency to have the power to resolve a breakdown at a major financial institution. Federal Reserve Chairman Ben S. Bernanke two weeks ago called for regulators to be given the authority to seize such firms, in the way the Federal Deposit Insurance Corp. already has for deposit-taking institutions.
Officials favor giving the Fed greater responsibility for managing risk across the financial system as was proposed almost a year ago by former Treasury secretary Henry Paulson, support for which is waning in Congress. President Barack Obama may also subject executive pay to greater scrutiny, the New York Times reported. An administration official denied that curbing compensation will be a major focus of the regulatory plan.