Just another day where just a few credit unions need to be bailed out, fucking unbelievable how this news just continues to be ignored. This has become just a laughing matter at this point. Seems like the more fucked things get the better off everything really is. Gov't seizes 3 failing wholesale credit unions; will resell $50 B of toxic mortgage bonds ap Daniel Wagner, AP Business Writer, On Friday September 24, 2010, 6:51 pm WASHINGTON (AP) -- Federal regulators took over three key lenders to U.S. credit unions, after losses on mortgage investments threatened to topple them. The move was a reminder that parts of the financial system are still burdened by the toxic assets two years after the financial crisis peaked. The National Credit Union Administration voted Friday to place into conservatorship three corporate credit unions: Members United Corporate Federal Credit Union of Warrenville, Ill; Southwest Corporate Federal Credit Union of Plano, Texas; and Constitution Corporate Federal Credit Union of Wallingford, Conn. Conservatorship allows the government to run financial companies while keeping them open. The government will replace the companies' executives and boards. The companies will be shuttered, and their parts sold off to recoup losses. Corporate credit unions provide wholesale financing and investment services for the more than 7,000 U.S. credit unions. They do not offer retail services to consumers. Most retail credit unions remain healthy, and will continue operating as normal. Corporate credit unions made big bets on commercial and residential mortgage investments before the housing market collapsed. The bonds lost much of their value, leaving corporate credit unions with too little cash to cover unexpected losses. Regulators decided they could not be saved. The government will repackage $50 billion worth of toxic bonds from the companies it seized. New investments worth about $35 billion will be sold to private buyers. The government will guarantee them against losses. Officials said the plan will not cost taxpayers any money. The losses will be repaid with fees collected from credit unions, they said. The NCUA has borrowed billions from the Treasury to stabilize corporate credit unions. Treasury agreed to extend that loan through June 30, 2021, the NCUA said. That gives retail credit unions more time to spread out the cost of repaying. The NCUA has taken over five of the largest wholesale credit unions since March 2009. They account for 70 percent of the total assets of corporate credit unions, and 98 percent of the assets that lost value. The two largest companies were taken over last year. The three seized Friday also suffered big losses during the global credit collapse. Officials said they were kept open because of their importance to retail credit unions. "They weren't just out there operating," said Deborah Matz, chairman of the NCUA. "We were working very, very closely with their management to monitor their activities."
The markets have come to realize that the Fed will continue to print money indefinitely and lend it to the banks a near zero percent so they can turn around and buy treasuries at 4% so a few failed credit unions and insignificant banks along the way is meaningless. As long as the Fed Member Banks are protected there is no fear.
I wonder if anyone has worked out the reality of 1 billion toxic mortgage bonds and translate that loss into what that means in lost economic productivity per person. Perhaps the easy part is for the gov't to "back" the bond, supply an accounting entry but really the origin is ignored. How many people are affected and what are their consequences of the fail? No cost to the taxpayer, unlikely. Food stamps, unemploymenet benefits, etc etc. If you don't bail out the bank because it is a black hole that'll never be paid back, you'll have to bail out the individual forever, till you don't, then what? This is where the message of Velma Hart is so important. The middle class is spending down their assets, till we are eating hot dogs and beans, then what is Obama going to do?
y, people work their ass off for a few bucks, this banks f***ed up and the fed just prints billions and hands it to them, so common people who work like dogs finds the value of their dollars is reduced instantly, and this is permitted and continues