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NCUA Conserves Three Corporate Credit Unions - No Impact on SF Fire Credit Union

On September 24th, 2010 the NCUA (National Credit Union Administration) took conservatorship of three ‘corporate’ credit unions. This event has been reported in the media, and may raise questions or concerns about how it affects us. While this does not impact SF Fire Credit Union, it’s important to have an understanding of what has occured.

What is a ‘Corporate’ Credit Union?

There are two types of Credit Unions, which can be described as:

  • Natural Person: These are Credit Unions just like ours, who serve indivduals are offer them a wide variety of products and services – such as checking accounts, term certificates, investments and loans.

  • Corporate: Think of these as “Credit Unions FOR Credit Unions”. It’s where a Natural Person Credit Union has its checking account, term certficates, investments and loans. They are important in providing liquidity, investments and payment services to Natural Person Credit Unions.

What is ‘Conservatorship’?

When the NCUA conserves a Credit Union their goal is to ensure that the Credit Union remains (or returns to being) a financially sound and solvent financial institution. The Credit Union remains open and operational – and continues to provide services to its members.

Which Corporate Credit Unions did the NCUA take conservatorship of?

  • Members United Corporate Federal Credit Union (Warrenville, Illinois)
  • Southwest Corporate Federal Credit Union (Plano, Texas)
  • Constitution Corporate Federal Credit Union (Wallingford, Connecticut)

Why did the NCUA take this action?

Due to the types of services offered by Corporate Credit Unions, they do operate in the capital markets and hold highly-rated, investment grade securities. Like many others in those markets, they have seen the value of their investments decline in this lingering economic downturn – and as a result have experienced losses. The losses for these three Corporate Credit Unions were significant enough so that the Federal Government had to step in.

Does this impact SF Fire Credit Union?

No, it doesn’t. SF Fire Credit Union does not use the services of the three Corporate Credit Unions which were conserved on September 24th.