WASHINGTON (Reuters) – Regulators seized three corporate credit unions on Friday and will repackage about $50 billion in troubled assets to sell on the open market.
The National Credit Union Administration said the three corporate credit unions, which provide clearing services to retail credit unions, were critically undercapitalized.
Barclays Capital will manage the securitization plan, the regulator said, adding that a securitization trust will be created to issue guaranteed notes backed by the U.S. government.
NCUA Chairman Debbie Matz said the agency also put in place on Friday regulations requiring corporate credit unions to hold higher levels of capital and setting risk limits.
The seizure of the three corporate credit unions comes after the NCUA last year took over two other such institutions, citing a critical deterioration in their finances.
Corporate credit unions are the retail credit union's credit union, providing services including lending, and check and payment clearance services.
Corporate credit unions have experienced more troubles than their retail counterparts because they did not face the same restrictions on permitted investments, leading to big losses in certain securities during the financial crisis.
The institutions seized on Friday were Members United Corporate Federal Credit Union of Warrenville, Illinois; Southwest Corporate Federal Credit Union of Plano, Texas; and Constitution Corporate Federal Credit Union of Wallingford, Connecticut.
The NCUA insures credit union and consumer deposits up to $250,000 per account.
(Reporting by Dave Clarke and Karey Wutkowski; Editing by Tim Dobbyn)
CHICAGO (AFP) – General Motors has recalled 20,000 Cadillac CTS vehicles in the United States due to increased risk of injury to short people who don't wear seatbelts, a spokesman said Friday.
Crash testing showed the vehicle was not in compliance with federal regulations on the amount of force which reaches the legs of unbelted small people sitting in the front passenger seat, spokesman Alan Adler said.
"Only passengers not wearing a safety belt are affected," Adler told AFP.
"Recalls were not needed in other countries because they have national safety belt use laws."
No known injuries were associated with the defect, which affects 2009 and 2010 model years of the Cadillac CTS and CTS-V, Adler said.
Studies by federal safety regulators show that about 85 percent of Americans wear their seatbelts, he added.
Dealers will reduce the excessive injury risk by replacing the glove compartment at no cost.
LOS ANGELES – California's attorney general wants GMAC Mortgage LLC to stop foreclosures in the state until it proves it is complying with a state law aimed at preventing foreclosures.
California Attorney General Jerry Brown said Friday that he directed Ally Financial Inc., which owns GMAC, to prove it is complying with a law that prohibits lenders from taking steps to foreclose on a home before determining if the borrower is eligible for a loan modification.
This week, GMAC said it halted certain evictions and sales of foreclosed homes to correct a "potential issue" in its foreclosure process. The company has not specified the internal issue that prompted the moratorium.
Brown says the lender has continued its foreclosure operations in California.