January 29, 2009 / 1:17 AM / 9 years ago

UPDATE 1-US regulators back corporate credit union deposits

WASHINGTON, Jan 28 (Reuters) - U.S. regulators moved to guarantee deposits at corporate credit unions on Wednesday and inject $1 billion into the umbrella entity for these institutions to offset its losses on securities backed by mortgages.

The National Credit Union Administration’s board said the actions were designed to support a system facing “unprecedented strains on liquidity and capital due to extraordinary market disruptions and the current economic climate.”

Corporate credit unions are the retail credit union’s credit union, providing services including lending, and check and payment clearance services.

U.S. Central Federal Credit Union, with 26 corporate credit unions as members, said on Thursday it expected a 1.1 billion loss for 2008 due to a decision to write down $1.2 billion in “other-than-temporary impairments” in its portfolio.

The NCUA said in a statement it would issue a $1 billion note to Lenexa, Kansas-based U.S. Central to offset the anticipated losses.

In other actions, NCUA said the National Credit Union Share Insurance Fund would guarantee member shares in corporate credit unions through February and will extend the guarantee on a voluntary basis to all corporate credit unions through December 31, 2010.

The NCUA also proposed restructuring the corporate credit union system and said it would declare premium assessments to restore the credit union insurance fund.

The credit union-funded NCUA, with the backing of the U.S. government, operates and manages the fund insuring nearly 89 million account holders in all federal credit unions and the majority of state-chartered credit unions. (Reporting by John Poirier; Editing by Tim Dobbyn)

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