Regulators are taking over three companies that provide financing for U.S. credit unions, after the companies suffered massive losses on mortgage investments and were short cash.
The National Credit Union Administration says it placed into conservatorship the Members United Corporate Federal Credit Union, Southwest Corporate Federal Credit Union and Constitution Federal Credit Union.
The takeovers are the latest evidence that the banking industry is still plagued by bad mortgage debt.
The government regulator says it will wind down the companies by reselling up to $50 billion worth of securities that lost value after the housing market crashed in 2007. The debt will be repackaged and offered to private investors. It will be backed by the credit of the U.S. Treasury.