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Bridge corporates ready for business
ALEXANDRIA, Va. (10/6/10)--The National Credit Union Administration (NCUA) on Tuesday chartered the two bridge corporate credit unions to assume the operations of now conserved U.S. Central Corporate FCU (US Central) and Western Corporate FCU (WesCorp), completing another vital step in its corporate credit union resolution process. NCUA announced that the bridge corporates would be created at its special board meeting late last month. During that meeting, NCUA also placed three more corporate credit unions into conservatorship, finalized new rules governing the corporates and approved a plan to isolate and securitize the corporates so-called "legacy" assets. A total of $50 billion of these “legacy” assets will be isolated and funded, and $35 billion of those assets will be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. The newly created institutions will be known as U.S. Central Bridge Corporate FCU and Western Bridge Corporate FCU, the NCUA said. NCUA Chairman Debbie Matz said that the creation of the bridge corporates “is an important interim step toward an orderly transition that will allow consumer credit unions to exercise real choice about the future of the corporate system.” The bridge corporates will purchase and assume assets and member share deposits from the conserved corporate credit unions. The bridge corporates will offer little in the way of new services, and new loans will only be provided for “settlement purposes,” the NCUA said. Existing loans “will continue to be serviced,” and the field of membership for the new corporates will be identical of that of the now-conserved corporates. New members will not be accepted, according to the NCUA. Overall, the bridge corporates will focus on payment and settlement activities, and will not operate indefinitely, NCUA said. The agency is also “committed to operating the bridge corporate for sufficient time so that members can find individual solutions,” a process that could take up to 24 months. For the full NCUA release, use the resource link.
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