The timing of criticism toward a regulatory proposal to limit loan participations to a certain percentage of a credit union's net worth with the takeover of a California cooperative heavily steeped in the transactions may have created an ironic overlap.
Over a two-week span, the $318 million Telesis Community Credit Union's financial woes led to the Chatsworth, Calif.-based financial institution being conserved by the NCUA to the $1.3 billion Premier America Credit Union, which was appointed to manage its assets.
Some in the industry said Telesis was a ticking time bomb mainly because its commercial lending reach spanned too far beyond its California borders. In 2011 alone, its business loan portfolio experienced hit after hit. However, its loan participation arrangements are getting much of the scrutiny.
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