Government Bails Out Major Credit Unions

By Christopher Weber, Politics Daily

The federal government will bail out a key part of the credit-union industry still reeling from the mortgage crisis two years ago.

The Wall Street Journal reported Friday that regulators moved to stabilize three “wholesale” credit unions, which don’t service the public but deal with thousands of other financial institutions.

The National Credit Union Administration will take over the credit unions and manage $50 billion worth of troubled assets inherited from institutions that went under during the crisis, according to the Journal. To pay for it, the agency will issue up to $35 billion in government-guaranteed bonds.

The institutions seized by the government are: Members United Corporate Federal Credit Union in Warrenville, Ill., Southwest Corporate Federal Credit Union of Plano, Texas, and Constitution Corporate Federal Credit Union, Wallingford, Conn.

Last year the government similarly rescued two of the nation’s largest wholesale credit unions after it came to light that their losses were greater than previously reported.

Officials told the newspaper that the bailout announced Friday won’t cost taxpayers any money.

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