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Near collapse of CU prompts reform in New Brunswick
FREDERICTON, N.B. (12/14/07)--The New Brunswick legislature is calling for recommendations on strengthening the province's Credit Union Act to avoid a repeat of the near-collapse of a credit union. In March, the province's government approved $60 million to bail out the Caisse Populaire de Shippagan after it accumulated a $33.7 million deficit through improper accounting and loans (The Canadian Press Dec. 12). The bailout included a $31.5 million grant, a $10 million loan through stabilization shares of the credit union, and another $18.5 million earmarked as provisional funds for the New Brunswick Credit Union Deposit Insurance Corp. The legislature was scheduled to release a discussion paper Thursday--the first step in drawing up amendments to the act, said the New Brunswick Justice Department. The paper asks for recommendations on how to ensure the credit union system is adequately capitalized, how to strengthen regulators, how to improve governance structures, and how to avoid future conflicts of interest. The Justice Department said it wants to move to a system where credit unions and caisse populaires placed under government supervision must comply first to regulations before appealing.


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