Magazine article American Banker

House Probe Could Threaten Corporates' Uninsured Status

Magazine article American Banker

House Probe Could Threaten Corporates' Uninsured Status

Article excerpt

A Congressional investigation could challenge the noninsured status of some corporate credit unions.

Proposals to require federal insurance "very well may come up again as an offshoot of the investigation," said Mark Schroeder, president of Wisconsin Corporate Central Credit Union. "I don't know how deeply Congress is going to go."

In 1991, a General Accounting Office report suggested Congress amend the Federal Credit Union Act so only federally insured corporate credit unions could take insured deposits. The recommendation was shot down by credit union trade groups during a conference on the Federal Deposit Insurance Corporation Improvement Act of 1991.

Officials of the five noninsured corporate credit unions said that their customers are comfortable with their uninsured status. The officials also said that, as wholesale financial institutions, the costs of insurance outweigh the benefits.

Rep. Henry B. Gonzalez, D.-Tex., chairman of the House Banking Committee, has launched a probe of U.S. Central Credit Union and the corporate credit unions in the wake of a $255 million investment U.S. Central made in a troubled Spanish bank. Aides said a hearing may be called.

Besides Hales Corners-based Wisconsin Corporate, which has $726 million in assets, the other noninsured corporates are:

* Missouri League Corporate Credit Union, St. Louis, with $800 million in assets.

* Treasure State Corporate Central Credit Union, Helena Mont. …

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