Legacy Assets Proved Historic Shock to the System
It was a shock and it was unprecedented. The NCUA hammer brought down on the legacy assets held by the corporate system during 2010 caused it to reel as never before.
The ripple effect from the NCUA rulings on those assets are still causing economic pain for thousands of natural person credit unions from coast to coast while also forcing the massive restructure of the corporate network.
Inactive "bad bank" corporate charters and the legacy assets attached to them were placed into a trust and transferred to the NCUA's Asset Management and Assistance Center in Austin, Texas, for management.
As the NCUA saw it, the trust structure allowed it to securitize the bonds without having to realize part of all of the unrealized losses, which would result in an immediate and severe write-down.