If accounting rules are preventing NCUA from successfully separating toxic assets from corporate balance sheets without realizing additional losses, the regulator has another option: remove the performing assets instead.
Such a plan was suggested by North Carolina's State Employees' CU President/CEO Jim Blaine in February 2009, before the NCUA's conservatorship of U.S. Central FCU and Western Corporate FCU.
The NCUA could charter new corporates to replace those rendered insolvent by devalued investments. Core services could then be transferred to the new entities, giving members an opportunity to recapitalize without a legacy asset burden.
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