ALEXANDRIA, Va. (9/27/10)—The National Credit Union Administration (NCUA) on Friday placed three more corporate credit unions into conservatorship, finalized new rules governing the corporates and approved a plan to isolate and securitize the corporates so-called “legacy” assets. NCUA Chairman Debbie Matz called the agency's much-anticipated actions "a comprehensive solution to the problems afflicting the corporate credit union system." The three corporates placed into conservatorship are Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU. The corporate credit unions, whose assets totaled $7.4 billion, $9.5 billion, and $1.2 billion, respectively, will join U.S. Central FCU and Western Corporate FCU (WesCorp) under conservatorship. While business at the three credit unions will largely continue unimpeded, NCUA Chairman Debbie Matz did say that the CEOs of both Members United and Southwest had been replaced. Constitution will likely be merged into another existing corporate, she added. As a result of the trio of NCUA actions, the NCUA now holds 70% of all assets held in corporate credit unions and 98% of the distressed, so-called “legacy assets” that have caused the corporate credit union system problems. The legacy assets are made up primarily of private label, residential mortgage-backed securities that were significantly devalued during the turmoil in the overall mortgage market. The NCUA plans to deal with these losses by isolating and funding $50 billion of these assets. The assets will then be reissued as NCUA Guaranteed Notes (NGN), which will then be sold on the open market. The NCUA said that additional information about the securitzation process will be made available as the process moves forward. "There are some positive aspects for credit unions in the actions that NCUA has taken, the biggest being that credit unions will only have to cover the actual, eventual credit losses--and nothing else, including market losses," commented CUNA President/CEO Bill Cheney. "We advocated for that and are gratified the agency listened to us. However: The credit losses will be substantial--in a range now estimated of between $8 billion to $10 billion; but only time will tell exactly how much or how little." The revised corporate rules that NCUA adopted today will implement stronger capital requirements on the corporates, establish concentration limits on investments, revise asset-liability management requirements and change governance standards. The revisions track close to what the agency initially proposed and are generally in line with what CUNA's Corporate CU Task Force has recommended (see related story). CUNA's Cheney noted that the NCUA has put out a great deal of detail that must be pored over. "We’ll have to take the time to cull through everything that the agency has done in order to have a clear picture of its impact on credit unions," he noted. However, Cheney said, the NCUA’s actions "have the potential to move us past this chapter and better position the credit union system for the future--while being invisible to consumers who rely on credit unions for affordable financial services.” The NCUA has developed a web page to provide additional resources on the actions taken Friday. For the NCUA page and a CUNA summary of the NCUA’s actions, use the resource links.