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U.S. Central Bridge Closed

The ""National Credit Union Administration"":http://www.ncua.gov/Pages/default.aspx (NCUA) announced the closing of U.S. Central Bridge Corporate Federal Credit Union (U.S. Central Bridge).

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The closing comes after three years of efforts to stabilize the corporate credit union sector, the agency stated in a release Monday.

""Decisive actions by both NCUA and credit unions brought the system back from the brink. It wasn't easy, and it required sacrifices, but there was no interruption of service to members while we overcame the worst economic crisis since the 1930s,"" said NCUA Board Chairman Debbie Matz.

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""We now have a stronger, safer system,"" Matz continued. ""We have set high standards for corporate credit union investments, capital and governance, and we've created a new operating environment for wholesale corporate credit unions to serve retail credit unions. The decisions NCUA and credit unions made have produced a solid foundation for the future.""

In October 2010, U.S. Central Bridge took over operations of U.S. Central Federal Credit Union (U.S. Central), which experienced significant losses after buying faulty mortgage-backed securities (MBS). U.S. Central was founded in 1974 and once stood as the largest corporate credit union.

In order to avoid disruption to the credit union system and protect consumers, U.S. Central was placed into a conservatorship and eventually transitioned into Lenexa, Kansas-based U.S. Central Bridge.

To recover losses, NCUA says it has filed lawsuits against seven Wall Street securities firms that sold ""faulty"" MBS products to the failed institutions. NCUA has separately settled for over $170 million with Citigroup, Deutsche Bank Securities, and HSBC.

About Author: Esther Cho

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