In an effort to reduce losses to the NCUSIF, the NCUA on Wednesday announced a pilot program in which institutions that acquire failing credit unions can purchase and service loan pools and the NCUA would reimburse a percentage of any loan losses.
The agency said it hopes the loss share program will make it easier to handle the resolution of large credit unions that are facing financial difficulty and aren't viable as free standing institutions. In recent months, the agency has reported an increase in the number of larger credit unions rated CAMEL 3 or higher.
"This pilot represents an innovative and sensible effort by NCUA to minimize losses to the NCUSIF and foster a lower-cost, market-based solution to the problems associated with failures," NCUA Chairman Debbie Matz said in a statement.
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