The National Credit Union Administration (NCUA) is taking a page from the the Federal Deposit Insurance Corp. (FDIC) with plans to securitize $50bn in assets cherry-picked from failed corporate credit unions. Last week, the FDIC successfully placed $653m worth of structured finance notes on residential mortgages seized when Delaware-based Franklin Bank failed. The NCUA is similar in operations to the FDIC, guaranteeing deposits for credit union customers and providing regulation and oversight of the credit union industry. And as with the FDIC, the NCUA deal would carry the full faith of the US as a backstop against losses, sources tell HousingWire. In a prepared remarks (download here) before the Missouri Credit Union Association annual advocacy and business meeting, chairman Debbie Matz said the NCUA is close to proposing a plan that would remove the riskiest legacy assets from ongoing corporates, while carrying forward the most valuable pieces of the corporate system. Corporate credit unions provide short-term and long-term credit to promote liquidity in credit union lending. In March 2009, the NCUA placed the two largest corporate credit unions, US Central Credit Union and Western Corporate Federal Credit Union in conservatorship. In the future, the NCUA will implement new rules and regulations to help prevent corporate credit unions for failing. And, as for the securitization, the administration does not expect the first attempt to go especially smooth. “There is no easy way to un-bundle over $50bn worth of long-term assets, repackage them into marketable bonds, and move them from corporates’ balance sheets without realizing the losses,” Matz said. “Yet today we feel we are on the verge of a breakthrough,” she continued. “If the plan proceeds as we envision, it could even allow credit unions to recover future earnings from legacy assets that out-perform current loss projections.” Matz did not disclose any specifics of the proposal, and a spokesman for the NCUA declined to further expand on her comments. In her speech, Matz said the team charged with developing the proposal is scheduled to present the plan to the NCUA board by the end of June. “I want to unveil NCUA’s plan to resolve the corporate crisis as quickly as possible,” she said. “But I do not want to rush this critically important process. We may only have one chance to get this right.” Write to Austin Kilgore. The author held no relevant investments.