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Description
When people think of credit unions, they commonly are referring to natural
person credit unions or NPCUs. These NPCUs provide loans, take deposits,
and offer banking services (e.g., internet banking, bill payment, and money
transfers) to their members (consumers). Corporate credit unions provide
correspondent services for NPCUs. That is, they provide investments,
liquidity, and payment services to the NPCUs so NPCUs can in turn offer a wider
variety of services to their members. Corporate credit unions do not
interact with consumers.
Corporate credit unions take in deposits from their member NPCUs and in turn
make investments. The economic downturn has had a significant impact on
the investment portfolios of a number of corporate credit unions. Trouble
in the housing markets has led to the recognition of losses on mortgage related
securities. Additionally, the tightening of liquidity on a global scale
threatened corporate credit unions’ ability to meet the ongoing business needs
of their member natural person credit unions.
In light of the critical role corporate credit unions play in assisting natural
person credit unions in providing financial services to American consumers, NCUA
has taken a number of actions to ensure ongoing daily operations of corporate
credit unions continue during the financial crisis. The actions taken are
collectively known as the “Corporate Stabilization Program” and are set forth in
this section of NCUA’s website.