A few developments last night from Bank Failure Friday. Also, for those interested, a Boston newspaper this week published a rather good photo display of the global meltdown at this link... http://tinyurl.com/dkogyg

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Two Largest Credit Unions Seized

Rolfe Winkler

March 20, 2009 8:10 pm

WSJ is reporting that regulators seized the two largest corporate credit unions this evening.

In the latest move by federal authorities to prop up the nation’s banking system, regulators late Friday seized control of the two largest wholesale credit unions in the U.S. after finding that their losses on mortgage-related securities were larger than previously thought.

U.S. Central Corporate Federal Credit Union in Lenexa, Kan., and Western Corporate Federal Credit Union in San Dimas, Calif., which have a total $57 billion in assets, were taken into conservatorship by federal regulators…

In total, the 28 wholesale credit unions in the U.S. were showing paper losses of about $18 billion as of Dec. 31. Mr. Fryzel said regulators aren’t concerned about the health of any other wholesale credit union besides the two brought into conservatorship.

Mr. Fryzel said NCUA’s latest estimate is that wholesale credit unions will eventually have to realize between $10 billion and $16 billion in losses on their holdings. The agency on Friday also raised its estimate for what these losses will cost its insurance fund, to $5.9 billion from the prior $4.7 billion estimate.

These two credit unions did NOT serve the general public. According to regulators quoted in the article, “the vast majority of regular credit unions…are considered financially sound.” Still, if your money is in a credit union and you have questions about account insurance, I recommend familiarizing yourself with the National Credit Union Association Insurance Fund website.

In other news, FDIC reported bank failures 18, 19, and 20 for 2009. In total, the three have $1.1 billion in assets and $854 million in deposits. FDIC estimates that resolving them will cost the Deposit Insurance Fund $207 million.

Incidentally, FDIC Chairwoman Sheila Bair highlighted the DIF’s dwindling reserves in a speech today:

“Without additional revenue beyond the regular assessments, current projections indicate that the fund balance will approach zero,” she said."