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For Details, Contact NCUA Public & Congressional Affairs
E-mail: pacamail@ncua.gov
Phone: 703.518.6330

National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428
Fax: 703.518.6409


Media Advisory

FOR IMMEDIATE RELEASE

Weekly Corporate Credit Union Update –

May 8, 2009

May 8, 2009, Alexandria, Va. – Normal operations continue without interruption at U.S. Central Federal Credit Union (U.S. Central) and Western Corporate Federal Credit Union (WesCorp).  The following items are of note:

  • WesCorp posted on its website the March 31, 2009, financial statements on Friday, May 1, 2009.  The Other-Than-Temporary-Impairment (OTTI) charges reflected on these financial statements are $5.8 billion.  This resulted in the exhaustion of all Paid-in-Capital (PIC) and Membership Capital Accounts (MCA) at WesCorp.
  • U.S. Central plans to release its March 2009, financial statements on May 8th.  As reported to its members last week, 100% of PIC and 63% of MCAs have been exhausted.
  • Member communication and outreach efforts continue.  U.S. Central reported no formal member meetings this week.  WesCorp held a webinar for member credit unions on Thursday, May 7th, and begins a series of town hall meetings on May 18th.
  • NCUA will issue guidance next week in the form of a Letter to Credit Unions for holders of corporate credit union PIC and MCA accounts explaining the implications of exhausted PIC and MCA.
  • Later this month, the NCUA Board will be considering changes to the Temporary Corporate Credit Union Liquidity Guarantee Program to provide longer term funding options for all corporate credit unions.

In response to questions raised following the announcement of expected Other-Than-Temporary Impairment charges at the two corporates, Chairman Fryzel stated, “I am aware the announcement last week of U.S. Central’s expected Other-Than-Temporary Impairment charge and resulting impact to PIC and MCAs raised some questions pertaining to NCUA’s $1 billion capital note in U.S. Central.  The OTTI charge results in a 63 percent exhaustion of U.S. Central’s MCA accounts, leaving the balance unencumbered and available as a buffer to absorb losses in front of the NCUSIF capital note.  This understandably generated discussion on the need to fully impair the NCUSIF capital note in NCUA’s reserving for share insurance fund losses.  I want to assure the credit union community that before any final invoices are mailed out NCUA will perform an updated analysis to reflect an accurate and realistic assessment charge, keeping in mind there are some differences between the accounting for OTTI charges at the institution level and reserving requirements for the share insurance fund.”

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. NCUA is funded by credit unions, not federal tax dollars.

-NCUA-