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Friday, March 20, 2009
Two Large Corporate Credit Unions Seized by Regulators
Federal regulators seized two of the nation’s largest corporate credit unions late Friday after discovering the institutions' losses on mortgage-related securities were greater than previously believed, the Wall Street Journal reported.
U.S. Central Corporate Federal Credit Union and Western Corporate Federal Credit Union were taken into conservatorship by federal regulators. The two institutions, which provide services not to the general public, but to retail credit unions, have a total of $57 billion in assets, the paper reported.
Michael E. Fryzel, chairman of the National Credit Union Administration, said that the government’s swift action was necessary to ensure the stability of both the credit union system and the insurance fund responsible for backing up retail-credit union deposits, according to the Journal.
The two institutions, Fryzel said, weren’t accurately estimating their losses and put the system at risk. Fryzel said top management at both institutions would be replaced, the Journal reported.