Saying that stress tests revealed "an unacceptably high concentration of risk," the NCUA today placed U.S. Central Federal Corporate Credit Union and Western Federal Corporate Credit Union into conservatorship and removed their boards and top executives.
NCUA Chairman Michael E. Fryzel told Credit Union Times that both credit unions will open Monday morning, and with the NCUA in control, it will get a more accurate financial picture of the two corporates.
Fryzel said the problems at the corporates will cost the NCUSIF $5.9 billion, compared with the initial estimate of $4.7 billion. He said there would be additional costs to natural person credit unions but they are not yet certain what the amount will be. Even before placing the two corporates into conservatorship, the NCUA had asked Congress to increase its borrowing authority from the Treasury Department from its current $100 million to $6 billion with the option of requesting an additional $30 billion emergency line of credit.
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