Western Corporate Federal Credit Union members will not be required to recapitalize the institution, corporate and NCUA officials told members during a Webinar today that provided detail regarding recently released first quarter 2009 financials.
"It will be your decision," said Mark Treichel, who heads the NCUA's Office of Corporate Credit Unions. Treichel added that credit unions will not be required to give a three-year notice; when the time comes to recapitalize, members will have the option to close their WesCorp membership.
The event, which attracted 500 subscribers, offered members a lengthy question and answer session that stretched the event out to two full hours. A few callers asked if WesCorp could return capital to members in the event losses aren't as severe as projected.
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Treichel stressed that it's "highly unlikely" credit unions would recover capital, but anticipated WesCorp could issue a "special dividend" in that event.
Officials revealed that actual losses to WesCorp's securities have been mild, only 2% among the Option ARM portfolio, for example, which has been completely absorbed by 18% credit enhancement.
However, those Option ARMs also currently report a 34% delinquency rate, and one official said WesCorp's team is assuming "many borrowers will walk away" once option ARMs recast.
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