A corporate credit union, also known as a central credit union, provides services to natural person (consumer)
credit union
A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including deposit accounts, provisi ...
s. In the credit union industry, they are sometimes referred to as "the credit union’s credit union". In the United States, corporate credit unions may either be chartered by the
National Credit Union Administration
The National Credit Union Administration (NCUA) is a government-backed insurer of credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the Federa ...
(NCUA), or under state authority if permitted under that state's financial services laws.
Corporate credit unions are owned by the credit unions that choose to do business with them and provide short term (
federal funds
In the United States, federal funds are overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear ...
) and long term investments (in government approved instruments). Corporate credit unions also provide financial settlement services through the
clearing of payments (check clearing), ACH (
Automated Clearing House
An automated clearing house (ACH) is a computer-based electronic network for processing transactions, usually domestic low value payments, between participating financial institutions. It may support both credit transfers and direct debits. T ...
),
electronic funds transfer
Electronic funds transfer (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of b ...
s (EFT) and
ATM transaction services and networks.
Originally, most states operated their own corporate credit union, which had strong ties to the
credit union league A credit union league or credit union central is cooperative federation for credit unions.
Canada
In Canada there is generally one credit union central per province (with exceptions). Except for the Desjardins Group (primarily operating in Quebe ...
operating in that state. Many corporate credit unions also provided consumer services to the employees and official family members of credit unions in cases where local or Federal laws prevented people employed by or having an interest in the operation of a financial institution as a means of
fraud prevention. The majority of modern corporate credit unions no longer perform a consumer function.
Through the 1980s, the corporate credit union industry underwent a
consolidation movement due to limited resources in the face of increasing demands or because of institution failures (ex. CapCorp, a Washington DC based corporate credit union that failed in the 1990s). There has also been a move by the stronger corporate credit unions to cross state lines and offer their services to credit unions that were previously outside their scope of business.
The largest corporate credit union in the United States was
U.S. Central Credit Union. U.S. Central Credit Union and the second largest corporate credit union,
Western Corporate Federal Credit Union
Western Bridge Corporate Federal Credit Union, or WesCorp, was a financial services cooperative headquartered in San Dimas, California. As a corporate credit union, WesCorp provided services to natural person (consumer) credit unions. WesCorp se ...
, were placed in
conservatorship
Under U.S. law, conservatorship is the appointment of a guardian or a protector by a judge to manage the financial affairs and/or daily life of another person due to old age or physical or mental limitations. A person under conservatorship is a ...
by the NCUA on March 20, 2009. On September 24, 2010, NCUA regulators also seized three wholesale credit unions located in Connecticut, Illinois and Texas.
See also
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NCUA Corporate Stabilization Program The NCUA Corporate Stabilization Program was created on January 28, 2009, in response to investment losses incurred at U.S. Central Credit Union. U.S. Central was a third-level corporate credit union that provided services to other corporate credit ...
*
Credit union league A credit union league or credit union central is cooperative federation for credit unions.
Canada
In Canada there is generally one credit union central per province (with exceptions). Except for the Desjardins Group (primarily operating in Quebe ...
*
Credit union service organization
Credit union service organizations (CUSOs) are corporate entities in the United States that are owned by federally chartered or federally insured, state chartered credit unions.
Under US federal law and the National Credit Union Administration ...
*
Reinsurance
References
External links
NCUA Corporate Credit Union Supervisors Examination GuideThe European Union Project “Credit Cooperatives”official web site
Credit unions
Cooperative federations
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