The central short-term objective of NCUA’s Corporate Stabilization Program has been to increase liquidity in corporate credit unions. Since the NCUA Board first began taking stabilization actions, liquidity has demonstrated marked improvement. The reliance on external borrowing has declined from $11.8 billion to $2.1 billion.
NCUA believes that the actions to conserve the two corporates, in tandem with established plans to enhance liquidity and generally stabilize the corporate network, represent the most cost effective and prudent alternative available to the credit union industry.
David Corking on 23 Mar 09Everyone seems to agree that the issue with the CU system is liquidity (being able to turn loans or bonds into cash). This is smaller, and much more easy to fix, than solvency problems that have damaged much of the rest of the financial system. (Solvency is having more assets - such as loans and bonds - than liabilities - such as customer deposits.)