Corporate Credit Union
Encyclopedia
A corporate credit union, also known as a central credit union, provides services to natural person (consumer) credit union
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
(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 (Fed Funds) 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
), electronic funds transfer
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
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 is U.S. Central Credit Union
. U.S. Central Credit Union and the second largest corporate credit union, Western Corporate Federal Credit Union
, were placed in conservatorship
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.
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
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
National Credit Union Administration
The National Credit Union Administration is the United States independent federal agency that supervises and charters federal credit unions...
(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 (Fed Funds) and long term investments (in government approved instruments). Corporate credit unions also provide financial settlement services through the clearing
Clearing (finance)
In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction....
of payments (check clearing), ACH (Automated Clearing House
Automated Clearing House
Automated Clearing House is an electronic network for financial transactions in the United States. ACH processes large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit payroll and vendor payments. ACH direct debit transfers include consumer payments...
), electronic funds transfer
Electronic funds transfer
Electronic funds transfer is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems....
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
Credit union league
A credit union league is a United States state-level trade association for credit unions, which are non-profit financial cooperatives. Credit union leagues hold a primary interest in the Credit Union National Association ....
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
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
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
Consolidation (business)
Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...
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 is U.S. Central Credit Union
U.S. Central Credit Union
U.S. Central Federal Credit Union is the largest corporate credit union in the United States. Unlike consumer driven credit unions , U.S. Central provides its services only to other corporate credit unions, in effect acting as the "corporate credit union's credit union". The organization was...
. U.S. Central Credit Union and the second largest corporate credit union, Western Corporate Federal Credit Union
Western Corporate Federal Credit Union
Western Bridge Corporate Federal Credit Union, or WesCorp, is a financial services cooperative headquartered in San Dimas, California. As a corporate credit union, WesCorp provides services to natural person credit unions...
, were placed in conservatorship
Conservatorship
Conservatorship is a legal concept in the United States of America, where an entity or organization is subjected to the legal control of an external entity or organization, known as a conservator. Conservatorship is established either by court order or via a statutory or regulatory authority...
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.