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US To Bail Out And Manage Credit Unions

From the Wall Street Journal:

Debbie Matz, chairman of the National Credit Union Administration.

Credit Unions Bailed Out

September 25, 2010

Two years after the peak of the financial crisis, the federal government swooped in to stabilize a crucial part of the credit-union sector battered by losses on subprime mortgages.

Regulators announced Friday a rescue and revamping of the nation’s wholesale credit union system, underpinned by a federal guarantee valued at $30 billion or more

And once again, we only hear about it after it is a fait accompli.

Friday’s moves include the seizure of three wholesale credit unions, plus an unusual plan by government officials to manage $50 billion of troubled assets inherited from failed institutions...

Every day we seem to take another step down the road of fascism, where the state may not own the tools or production, but it firmly controls them.

To help fund the rescue, the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets.

Officials said the plan won’t cost taxpayers any money.

That’s what they always say. At first.

Still, it marks the latest intervention by the U.S. government into a financial system weakened by the real-estate bust. Bad bets on mortgage-backed securities have now killed five of the nation’s 27 wholesale credit unions since March 2009. The federal government, which now controls about 70% of the total assets at such credit unions, said the surviving institutions will be reined in so that they take fewer risks with their investments.

And if these government controlled credit unions go belly up, taxpayer money won’t be used to bail them out?

"Previously, we stabilized the system, and now we’re resolving the problem and reforming the system," said Debbie Matz, chairman of the National Credit Union Administration, the U.S. agency overseeing credit unions…

As we have seen before, “reform” is Obama-speak for ‘take over.’ 

Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets. But some chased higher returns by loading up on securities backed by subprime mortgages or other risky loans. Their portfolios were decimated by the mortgage meltdown

You mean the previous draconian federal regulations did not stop credit unions from doing foolish things? 

New regulations issued by the NCUA on Friday will make oversight of wholesale credit unions much tougher, [Ms. Matz] said, and are meant to fix any regulatory shortcomings.

Once again, that’s what they always say.

This article was posted by Steve on Sunday, September 26th, 2010. Comments are currently closed.

5 Responses to “US To Bail Out And Manage Credit Unions”

  1. mr_bill says:

    Stuart Varney put it pretty succinctly this morning, “The feds have unleashed another bailout, five weeks before the mid-term elections and over a weekend,” adding that many people are probably unaware of this new bailout and will most likely be seeing it in the Monday papers and news reports.

    This soft-headed Congress has time for Colbert to show up with his colonoscopy pictures and time for bailouts but can’t seem to find enough hours in the day to consider stopping the largest tax increase in American History. For a party that wants to brand its opposition as being in bed with big business, big banks, etc., the democrat party sure has spent a lot of time (and a ton of our money) bailing out some big businesses (autos, insurance, Wall Street firms, banks, credit unions, etc.).

  2. NoNeoCommies says:

    I have belonged to credit unions exclusively for decades because they have managed to avoid the major stupidity of banks controlled by the government.
    I didn’t care too much that Omama was messing up the banks, but now he’s coming after the credit unions too.
    Time to bury money along with the guns and ammo.

  3. proreason says:

    Last few days to get high before the test is taken.

  4. untrainable says:

    I don’t believe it. They’re actually taking responsibility for the recession. In PRINT!!
    It says right there that the credit unions are battered and in need of government interference because of ” losses on subprime mortgages.” There it is in black and white. And who is responsible for the sub-prime mortgage problems? The Democrats in congress since 2007. Bawney Fwank, Chris “Sweet Dealin'” Dodd and the rest of the democrat mafioso.

    And here I thought all our credit problems were because of the “unfunded” wars and the “unfunded tax cuts” (read George Bush’s fault).

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