Regulators Sieze Credit Entities

[enough]

Source: NYT

Regulators Seize Credit Entities
By ERIC DASH
Published: September 24, 2010

Nearly two years after Wall Street’s giants were rescued by the federal government, regulators on Friday took over three financial institutions that provide the underpinning for hundreds of the nation’s credit unions.

The three entities, known as wholesale credit unions and located in Connecticut, Illinois and Texas, were seized by regulators from the National Credit Union Administration, which supervises about 7,500 credit unions that provide basic banking services to millions of Americans. Most of those customers are linked to credit unions through their employers or through membership organizations.

Although the overwhelming majority of those credit unions are financially sound, some of the wholesale entities behind them have been hobbled by losses on subprime mortgage bonds and other complex investments. Of the 27 wholesale credit unions operating in the United States, five have been seized by regulators over the last 18 months.

The agency announced a plan Friday to separate billions of dollars of the bad assets that have crippled those institutions and then repackage them for sale with a federal guarantee. It also established a set of regulations that will require wholesale credit unions to hold more capital and improve their risk management and governance practices.

Read more: http://www.nytimes.com/2010/09/25/business/25union.html?hp

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And a link to Zero Hedge's more detailed reporting of the story, with further links:

http://www.zerohedge.com/article/three-wholesale-credit-unions-nationalized-us-securitizes-50-billion-legacy-toxic-assets-fai

[tavalon]

1. Yikes!

I had thought the credit unions were somewhat immune.

[dkf]

2. Yikes double yikes and triple yikes.

" The federal government, which now controls about 70% of the total assets at such credit unions, also said the surviving institutions will be reined in so that they take fewer risks with their investments."

From zerohedge above.

[enough]

3. Morning kick for last night's news dump. (nt)