WASHINGTON (9/23/10)--The purchase of private-label mortgage-backed securities or subordinated securities will be prohibited by the National Credit Union Administration's (NCUA) upcoming corporate credit union rule, NCUA Chairman Debbie Matz said earlier this week. Private label mortgage-backed securities make up the majority of troubled legacy assets that are still held by U.S. Central Federal Credit Union and Western Corporate Federal Credit Union (WesCorp), as well as other corporate credit unions. These troubled legacy assets resulted in corporate credit unions recognizing billions in losses, with U.S. Central and WesCorp losing a combined $9 billion to $11 billion, according to Credit Union National Association estimates. The NCUA, as it develops its legacy asset plan, is attempting to deal with as much as $50 billion in long-term assets. The legacy asset plan is also expected to be reviewed this Friday. Matz revealed some additional details of both the pending corporate rule and the legacy asset review in a speech delivered before the National Association of Federal Credit Union's annual conference on Tuesday. Discussing the corporate rule, Matz said that corporate credit unions would be subject to leverage capital requirements, and would need to adhere to Basel I standards in the future. The corporates would also be subject to the same Prompt Corrective Action requirements as all other federally-backed financial institutions, going forward. The NCUA will also limit the amount of funds that a corporate credit union may receive from any credit union to 15% of the corporates total assets. The agency will also impose some limitations on corporate credit union leadership by raising “standards for corporate board member qualifications” in an attempt to “elevate each director’s level of experience and expertise.” Matz added that one of the NCUA’s core goals as they devise their legacy assets plan is “to devise a way to safely deal with the legacy assets at the lowest possible cost consistent with sound public policy.” “A comprehensive plan must isolate the riskiest legacy assets from the corporate system, allowing the whole credit union system to move forward unburdened by the impaired assets,” she said. For the full speech, use the resource link.