U.S. seizes 2 big credit unions
U.S. takes over two credit unions after tests find vulnerability. U.S. Central Federal Credit Union and WesCorp have combined assets of $57 billion.
NEW YORK (CNNMoney.com) -- The federal government, in its latest effort to prop up the financial system, took over two big wholesale credit unions Friday with combined assets of $57 billion.
U.S. Central Federal Credit Union in Lenexa, Kan., and Western Corporate Federal Credit Union in San Dimas, Calif., were placed under conservatorship "to stabilize the corporate credit union system and resolve balance sheet issues," according to the National Credit Union Administration.
The administration is a federal agency that regulates, charters and supervises federal credit unions.
Neither of the failed institutions serve consumers directly. As corporate credit unions, they service the credit union system. Credit unions count 90 million members nationwide.
Members of the two credit unions will not experience any disruption in service and are free to make deposits and access funds, according to the regulator.
U.S. Central Federal Credit Union has about $34 billion in assets, with 26 retail corporate credit union members. WesCorp has $23 billion in assets and approximately 1,100 retail credit union members.
The board of the NCUA analyzed the health of the mortgage and asset backed securities held by all corporate credit unions starting on Jan. 28. The board determined that the two credit unions taken over had "an unacceptably high concentration of risk," according to the statement.