Comments for Regulators Seize Two Large Credit Unions: U.S. Central and WesCorp
Mr. Sparkle says:
Uh oh... nobody is immune!
Mr. Sparkle Fri Mar 20 18:13:05 2009 CDT #
CRbot says:
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/4896049296668080124
CRbot Fri Mar 20 18:14:06 2009 CDT #
km says:
does that count as #19 and #20
km Fri Mar 20 18:14:23 2009 CDT #
Mr. Sparkle says:
@Km - I believe that credit unions have a different oversight body - the NCUA - that behaves like FDIC. But I'm not the expert on that. There are others here that know far more than me. So... I think that perhaps these should start a new list instead of being tacked onto the bank list.
Mr. Sparkle Fri Mar 20 18:16:36 2009 CDT #
Calculated Risk says:
These are corporate credit unions (they took money from other credit unions and invested it). Obviously they've lost some serious money, but it sounds like all the money is all guaranteed.
This will be a significant story ...
best to all.
Calculated Risk Fri Mar 20 18:17:05 2009 CDT #
Terry says:
Bill - you and I have exchanged e-mail about this earlier this year - sound like the NCUA's first attempt to shore up the corporate credit unions failed.
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Terry Fri Mar 20 18:55:04 2009 CDT #
Anonymous says:
they haven't lost serious money... they've only *unrealized* loss serious money - who knows how much of their current unrealized losses will turn into actual losses
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Anonymous Fri Mar 20 22:18:13 2009 CDT #
Anonymous says:
FAS 157/mark-to-market claims another victim...
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Anonymous Fri Mar 20 22:19:27 2009 CDT #
Virgil says:
http://www.uscentral.org/
Second item: "Safe havens: Credit Unions earn some interest"
Virgil Fri Mar 20 18:17:16 2009 CDT #
Rob Dawg says:
There's the "billions" the commentariat was lusting after.
Still, I wouldn't be surprised if the relative losses were much smaller than we've seen from banks.
Rob Dawg Fri Mar 20 18:17:57 2009 CDT #
Terry says:
I think the losses to the credit unions (or taxayers) will be major - most community credit unions rely entirely on the corproate credit unions for EVERYTHING. They take all funds from the community credit unions which are not loaned out and invest them in, guess what, mortage backed securities - so someone is going to have to cover the losses.
Parent Post
Terry Fri Mar 20 18:52:44 2009 CDT #
Virgil says:
http://www.wescorp.org/
"Moving Forward" ....."We'll be here"
Apparently not....
Virgil Fri Mar 20 18:19:12 2009 CDT #
Some Investor Guy says:
What next? Pawn shops failing? Payday lenders? Is no category of financial institution safe?
Some Investor Guy Fri Mar 20 18:19:44 2009 CDT #
EvilHenryPaulson says:
=:0>-<
EvilHenryPaulson Fri Mar 20 18:20:55 2009 CDT #
Comrade De Chaos says:
there will be a significant fear ...
Comrade De Chaos Fri Mar 20 18:21:08 2009 CDT #
Guest says:
FCUK
Guest Fri Mar 20 18:21:09 2009 CDT #
Counterpointer says:
OMFG, maybe I shouldn't tease the diabolical with a what next post??
Kerrist.
Next?
C
Counterpointer Fri Mar 20 18:21:11 2009 CDT #
Counterpointer says:
Why does halo do that sh!t with repeating end of line words??
C
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Counterpointer Fri Mar 20 18:22:25 2009 CDT #
Counterpointer says:
Encore, BINGO! Thanks, case proven.
C
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Counterpointer Fri Mar 20 18:23:19 2009 CDT #
Virgil says:
combinded $57 billions in assets says cnbc
Virgil Fri Mar 20 18:21:41 2009 CDT #
briwerk says:
Gee, I'm glad the depression is over already. Otherwise this might cause a relative increase in lack of confidence in the system.
briwerk Fri Mar 20 18:22:20 2009 CDT #
Fiduciary Doodie says:
Wes's due dilagence...
http://www.wescorp.org/content/wescorporg/html/dueDiligence.html
Fiduciary Doodie Fri Mar 20 18:22:54 2009 CDT #
sm_landlord says:
"What next? Pawn shops failing? Payday lenders?"
That sort of institution does not "fail" - instead, they usually have insurance fires.
sm_landlord Fri Mar 20 18:23:12 2009 CDT #
ATM card and $19 in the bank says:
Some Investor Guy,
I think this is the key phrase to predict whether a financial institution is unsafe:
"they took money from other [fill in the blank] and invested it"
As long as you run your own money, you probably take care not to blow yourself up.
ATM card and $19 in the bank Fri Mar 20 18:24:16 2009 CDT #
Fiduciary Doodie says:
CR,
Who exactly is capable of gauranteeing 57 billion? OH, AIG never mind... 8-)
But seriously, who can 'tee this?
Fiduciary Doodie Fri Mar 20 18:25:04 2009 CDT #
reptillian says:
Were the assets MBSs?
reptillian Fri Mar 20 18:25:47 2009 CDT #
Anonymous says:
private-label MBS ($14 billion) for made up about half of investment securities portfolio, equivalent to maybe 40% of total assets ($37 billion)
about $4b of the $14b had bond insurance (AMBAC, MBIA, etc.)
Parent Post
Anonymous Fri Mar 20 21:46:39 2009 CDT #
EvilHenryPaulson says:
If each second of your time were worth $1 ($3600/hr), it would take 1,806.172 years to earn $57bn (I accounted for 365.26 days per year)
just shy of 2 millennia
EvilHenryPaulson Fri Mar 20 18:26:02 2009 CDT #
briwerk says:
Two more banks down. Guess we're catching up for last week.
briwerk Fri Mar 20 18:27:50 2009 CDT #
sm_landlord says:
"If each second of your time were worth $1 ($3600/hr), it would take 1,806.172 years to earn $57bn (I accounted for 365.26 days per year)"
So while you have your spreadsheet open, solve that the other way and tell us what one second of Bill Gates' time is worth.
sm_landlord Fri Mar 20 18:28:40 2009 CDT #
Fiduciary Doodie says:
"This just in, reports say that these two CU's were fronts for Bill Gates money..."
Fiduciary Doodie Fri Mar 20 18:28:59 2009 CDT #
LAM says:
Court orders seizure, sale of General Growth mall
March 20, 2009
Louisiana court issued an order to seize and sell a General Growth Properties Inc. shopping center in a New Orleans suburb after the No. 2 U.S. mall owner failed to repay a $95 million loan, a Citigroup Inc. unit said on Friday.
The Oakwood Shopping Center in the town of Gretna is the fourth mall loan that General Growth has said over the past few days it would not be able to repay.
But it is unclear what the effect the relatively small foreclosure and defaults will have on the overall financial outlook for the company, which has said it may have to file for bankruptcy protection if it cannot refinance its much larger debt.
The Chicago-based company, which owns or operates more than 200 U.S. malls, has $1.18 billion in past due debt and additional $4.09 billion of debt that could be accelerated by its lenders. It is trying to garner the support of holders of notes from Rouse Co., which General Growth acquired in 2004, for support that would allow it skip the payments on $2.25 billion of notes this year.
Seize weekend continues...Sell the mall for top dollar
LAM Fri Mar 20 18:29:01 2009 CDT #
Anonymous says:
What, none in GA ?
Anonymous Fri Mar 20 18:29:28 2009 CDT #
EvilHenryPaulson says:
briwerk does not lie,
Bank Name Closing Date Updated Date
TeamBank, National Association, Paola, KS March 20, 2009 March 20, 2009
Colorado National Bank, Colorado Springs, CO March 20, 2009 March 20, 2009
FirstCity Bank, Stockbridge, GA March 20, 2009 March 20, 2009
EvilHenryPaulson Fri Mar 20 18:29:32 2009 CDT #
Counterpointer says:
Looks like danger ahead, perhaps we need a forward strategy, like this:
http://www.youtube.com/watch?v=P7_7l5SUlZI
Or at least something similar, at equal volume, or more. Maybe a shorter middle eight.
C
Counterpointer Fri Mar 20 18:30:56 2009 CDT #
reptillian says:
"If each second of your time were worth $1 ($3600/hr), it would take 1,806.172 years to earn $57bn (I accounted for 365.26 days per year)"
And it would take more than 31 years to accumulate a measly billion.
reptillian Fri Mar 20 18:31:54 2009 CDT #
Anonymous says:
I thought credit unions were safe :'(
Anonymous Fri Mar 20 18:32:12 2009 CDT #
WAWAWA says:
I thought CreditUnions are safe, as they are non-profit.
So much for that!!
WAWAWA Fri Mar 20 18:32:21 2009 CDT #
Wisdom Speaker says:
CR, I've got to add that I'm with ATM card here.
When you write "These are corporate credit unions (they took money from other credit unions and invested it)."
... as opposed to, say, an Investment Bank? An insurance company? Sigh.
The corporate credit unions probably didn't do the same nasty that the New York financial mafia were doing, but they weren't immune to the economic slide.
"Obviously they've lost some serious money, but it sounds like all the money is all guaranteed."
Remind me again, by what are all of these losses guaranteed? Oh, that's right - the "Full Faith and Credit of the U.S. Government". And who does the U.S. government turn to when it needs money and can no longer borrow? Oh, that's right - us...
Don't worry, it's just other people losing tons of money, with payouts guaranteed by you and your kids' future indentured servitude!
Wisdom Speaker Fri Mar 20 18:32:22 2009 CDT #
EvilHenryPaulson says:
personally I break down money into meals at restaurants for perspective
EvilHenryPaulson Fri Mar 20 18:33:20 2009 CDT #
CRbot says:
New Thread: BF 19 & 20: FDIC Seizes Teambank, National Association, Paola, Kansas and Colorado National Bank, Colorado Springs, Colorado
http://www.calculatedriskblog.com/2009/03/bf-19-20-fdic-seizes-teambank-national.html ( 0 comments ...You could be FIRST! )
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CRbot: Call me HAL.
CRbot Fri Mar 20 18:34:22 2009 CDT #
Wisdom Speaker says:
FWIW, the link is dead, both on CR and at the NCUA's website, so we can't easily get to their press release about "conserving" U.S. Central and Western Corporate.
http://www.ncua.gov/news/press_releases/2009/MR09-0320.htm
Also, in the spirit of full disclosure - it takes about 250 of the FDIC's piddling $250M bank closures to equal the financial damage that the NCUA just acknowledged by "conserving" the two corporate credit unions...
Wisdom Speaker Fri Mar 20 18:36:44 2009 CDT #
lawn grass says:
There is really nothing to say. Things worse than I thought they would be from the housing bubble, pension obligation bubble, debt bubble, dumb wishful thinking bubble.
Thought I was prepared for this. Not really.
lawn grass Fri Mar 20 18:41:39 2009 CDT #
That Barton Fink Feeling says:
Holy gawd, it's like the financial Special Olympics!
Citizens: I did not mean anything untoward by that controversial remark. Return to your hope activities.
That Barton Fink Feeling Fri Mar 20 18:42:45 2009 CDT #
Osprey says:
I'm involved with cu's - auditor & consultant. It's in investment losses - CDOS, MBSs, etc. - that is what US Central and the corporate cu's have incurred massive losses in. I assure you, the last thing the NCUA wanted to do was take over US Central & Wescorp. NCUA has already sent out Accounting Bulletin 09-1 to the retail cu's and they will have to take a significant expense to replenish NCUSIF, the share insurance fund, for these investment losses. Today is the worst day in cu history. The cu system has always been a stand alone system, paying for their own losses. David Marquis, Exec Dir of NCUA, testified before Congress this week wanting a larger line of credit with Treasury and to spread the existing losses over 5 years instead of 1 year - I guess we know why he was there now.
Osprey Fri Mar 20 18:44:07 2009 CDT #
Anonymous says:
USCFCU only had $22 million in CDOs - so very tiny - they had about $1B of sub-prime private-label MBS (FICO less than 620) and an additional $6 billion in near-prime private-label MBS (which they conservatively call subprime - maybe these are really Alt-A, though they didn't use that term) - $6b in unrealized losses in the portfolio as of Feb. '09 month-end
Wescorp's portfolio looks a little worse - $3 billion of <620 FICO subprime... which is 19% of the securities portfolio, 41% in sub-prime and 2% in CDOs - unrealized losses of $2.6B as of 1/31/09 - probably worsened to over $3B by end of Feb. if deterioration was on par with what happened at USCFCU
conservatorship buys the NCUA the time to hold these securities with unrealized losses until they (hopefully) mature at par
Parent Post
Anonymous Fri Mar 20 22:13:13 2009 CDT #
lawn grass says:
57 billion.
One guy can lose that. Big Deal.
lawn grass Fri Mar 20 18:44:28 2009 CDT #
mark says:
The US postal service is offering early retirement to almost one in four workers (150,000).
http://www.bloomberg.com/apps/news?pid=20601087&sid=aWY.glqpklgI&refer=home
mark Fri Mar 20 18:44:37 2009 CDT #
That Barton Fink Feeling says:
The postal service is going postal on itself.
That Barton Fink Feeling Fri Mar 20 18:49:36 2009 CDT #
Lobbyi$t Ben Dover says:
Do credit unions have pizza also? *DONT_KNOW*
Lobbyi$t Ben Dover Fri Mar 20 18:50:03 2009 CDT #
Anonymous says:
I audited cu's for five years. These are the biggest corporates in the us. The credit unions credit union so to speak. They are the wholesale cus to the ones you are members in. Most cu's are seven to nine figures in assets. A big one might be .5 billion.
Still a big news story. They are definitely fir profit but tax exempt. The members own the joint sort of.
Anonymous Fri Mar 20 19:01:57 2009 CDT #
Comrade-Dope jg (jg) says:
Thanks, Osprey, for the insider perspective; keep 'em coming.
Comrade-Dope jg (jg) Fri Mar 20 19:30:17 2009 CDT #
Anonymous says:
That s 20 bank failures for the 03/20/09
and
13 bank failures on 02/13/09
thats
20 for 20
13 for 13
I prognosticated this would happen today on the Quad(4) Witching day before it happened here
http://economicedge.blogspot.com/2009/03/morning-update-market-thread-320.html
check it...i called it live and into the future
Anonymous Fri Mar 20 19:50:08 2009 CDT #
WAWAWA says:
Are we fucked or what ?
http://www.ft.com/cms/s/0/3399ffb6-15af-11de-b9a9-0000779fd2ac.html
WAWAWA Fri Mar 20 20:03:05 2009 CDT #
Anonymous says:
The $5.9 billion in estimated exposure to the credit union share insurance fund will wipe it out. At the beginning of 2009 the fund held but $7 billion and $1 billion of that was invested in US Central in January to stop the run that had started.
NCUA is requiring natural-person credit unions to raise that $1 billion from their own balance sheets. NCUA's own estimates are that this $1 billion charge will close 500 credit unions, but that was seen as preferable to asking Congress for money. The credit union system cannot afford another $6 billion in recapitalization; the real question is how long NCUA will try to kick the can down the road before asking Congress for the money.
The credit union world is furious at NCUA for this, as they're being required to socialize the losses at an instutition two levels away from them. Natural-person CUs don't deal directly with US Central and cannot understand why they're funding the losses.
Anonymous Sat Mar 21 11:11:39 2009 CDT #
Captain Ned says:
Oops. Anonymous above is me.
Captain Ned Sat Mar 21 11:12:26 2009 CDT #
END