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HSBC Agrees To Pay $5.25 Million Settlement To NCUA

Last week, the National Credit Union Administration (NCUA) announced a settlement agreement with HSBC. HSBC hs agreed to pay $5.25 million to the NCUA for a complaint about its sale of residential mortgage-backed securities to five failed credit unions. The settlement agreement does not require HSBC to admit fault.

Similar to FDIC and the banks it oversees, the NCUA charges the credit unions it oversees with fees to cover failed credit unions and to protect depositors' assets. The NCUA uses the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to cover failed corporate credit unions. In this instance, the true risk of the mortgage-backed securities sold to corporate credit unions allegedly wasn't disclosed and led to the failed credit unions. Any payments the NCUA collects is used to offset future fees the NCUA charges for the TCCUSF.

The NCUA had filed five lawsuits against various securities firms, and had negotiated settlements with Deutsche Bank Securities ($145 million) and Citigroup ($20.5 million).

Corporate credit unions provide various services (e.g., short-term loans, check clearing, electronic funds transfers, ATM networks) to the consumer credit unions they serve. Consumer credit unions are the credit unions which we consumers join. Corporate credit unions are chartered by the NCUA or states.

In its 2010 annual report, the NCUA listed the following corporate credit unions:

Corporate Credit Union NameStateAssets (Mill)Members
Corporate America CU
Alabama $3,701.7 369
First Corporate Arizona $979.4 51
Western Bridge Corporate Federal California $16,756.3 1,010
System United Corporate Federal CU Colorado $2,091.3 363
Southeast Corporate Florida $2,561.5 390
Georgia Corporate Federal CU
Georgia $1,737.1 171
Iowa Corporate Central CU
Iowa $108.2 159
Members United Bridge Corporate Federal Illinois $10,012.9 2,166
Kansas Corporate Kansas $302.3 148
Kentucky Corporate Kentucky $363.3 105
Louisian Corporate Louisiana $146.7 172
Eastern Corporate Massachusetts $507.5 278
Tricorp Maine $617.1 184
Central Corporate Michigan $2,394.3 359
Missouri Corporate CU Missouri $501.0 223
Treasure State Corporate CU Montana $386.3 63
First Carolina Corporate North Carolina $1,917.7 172
Midwest Corporate North Dakota $181.7 60
Corporate One Federal CU Ohio $2,881.1 768
MidAtlantic Corporate Pennsylvania $3,025.7 888
Volunteer Corporate Tennessee $1,351.7 256
Southwest Bridge Corporate Federal Texas $7,745.3 1,377
VA Corp Virginia $1,056.5 229
Corporate Central CU Wisconsin $1,623.7 281
West Virginia Corporate Federal CU West Virginia $228.1 110
U.S. Central Bridge Federal Kansas $18,412.9 56
Total   $81,591.1 10,428


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