The mortgage-backed securities from the conserved corporate credit unions that the NCUA is selling have 0% risk and are backed by the full faith and credit of the government, the Federal Reserve and three other regulators concluded.
Because the bonds are backed by the government, the regulators would "not object to a banking organization's assignment of a zero percent risk weight,'' according to the letter, signed by officials of the Fed, the FDIC , the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The letter was dated yesterday and released today.
The agency is trying to sell the residential mortgage-backed securities, which are bundled loans from the corporate credit unions that the agency recently placed into conservatorship.
The original value of the notes was about $50 billion but the resecuritizied notes--which the agency is trying to sell in a series of transactions--are expected to raise about $35 billion.
The first in a series of transactions, which is scheduled to take place in the next few months, includes securities valued at approximately $3.85 billion.
Continue Reading for Free
Register and gain access to:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
