March 21 (Bloomberg) -- Two corporate credit unions, with combined assets of $57 billion, were seized by the National Credit Union Administration yesterday to stabilize a system used by 90 million customers amid a worldwide financial crisis. Three U.S. banks failed, bringing this year’s total to 20.

U.S. Central Corporate Federal Credit Union, in Lenexa, Kansas, and Western Corporate Federal Credit Union in San Dimas, California, were put into conservatorship, the regulator said in a statement. The credit unions failed so-called stress tests that found an “unacceptably high concentration of risk” from mortgage-backed securities, the agency said.

“Most of the bad assets that we’ve seen in the corporate world reside at these two institutions,” NCUA spokesman John McKechnie said in a telephone interview. “We will be able to resolve them in a more efficient way.”

The U.S. has 28 corporate credit unions, which make loans and provide other services for the retail credit unions that cater to the public. This is the first time a corporate credit union was seized since 1995, when NCUA took control of Capital Corporate, based in Landover, Maryland.

U.S. Central has about $34 billion in assets and serves 26 retail credit unions. Earlier this year, it was granted a $1 billion federal injection in an effort to shore up public confidence.

Western Corporate has $23 billion in assets and about 1,100 retail credit union members, the NCUA said. Yesterday’s two seizures may cost the agency’s insurance fund about $1.2 billion, McKechnie said.

Emergency Borrowing

The regulator is seeking $30 billion in emergency borrowing authority from the Treasury Department to combat mounting losses. The U.S. House of Representatives has already approved expanding credit to $6 billion from $100 million.

“Service continues uninterrupted at both U.S. Central Corporate Federal Credit Union and WesCorp,” the NCUA said in its statement. “Members are free to make deposits and access funds.”

Also yesterday, banks in Kansas, Colorado and Georgia were seized as foreclosures surged amid a recession and the highest unemployment in a quarter century. The banks with $1.1 billion in total assets and $853 million in deposits were shut by regulators, and the Federal Deposit Insurance Corp. was named receiver, according to e-mailed statements from the FDIC.

The deposits of TeamBank in Paola, Kansas, will be passed to Great Southern Bank in Springfield, Missouri. Herring Bank in Amarillo, Texas, is assuming the deposits of Colorado National Bank in Colorado Springs. Regulators were unable to find a bidder for FirstCity Bank of Stockbridge, Georgia, and the FDIC will send payments to insured depositors beginning on May 23.

Unemployment

The U.S. economy has shed 4.4 million jobs since the recession began in December 2007. Unemployment jumped to 8.1 percent in February, the highest in more than 25 years. A $787 billion government stimulus package is aimed at creating or saving 3.5 million jobs and easing credit.

FDIC-insured banks lost $32.1 billion from October through December, the first quarterly loss since 1990. The agency’s deposit insurance fund, used to reimburse customers of closed banks, tumbled 45 percent to $18.9 billion in the quarter from $34.6 billion in the preceding period, reflecting the closing of 25 lenders last year.

“There is no question that this is one of the most difficult periods we’ve had to deal with since the FDIC was created 75 years ago,” Chairman Sheila Bair said yesterday at the Independent Community Bankers of America conference in Phoenix.

Banks Acquire Assets

Herring Bank will take Colorado National’s four branches and buy $117.3 million of Colorado National’s assets at a discount of $4.2 million, the FDIC said. TeamBank’s 17 offices will open tomorrow as branches of Great Southern. The acquiring bank will purchase $656.5 million in assets at a discount of $100 million. The FDIC said the three failures will cost its deposit insurance fund, supported by fees on insured banks, about $207 million.

The FDIC classified 252 banks as “problem” in the fourth quarter, a 47 percent jump from the previous period and the highest total since June 1995. The Washington-based agency doesn’t name the “problem” banks. The FDIC projects bank failures will cost its insurance fund $65 billion through 2013.

To contact the reporters on this story: Margaret Chadbourn in Washington at mchadbourn@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net.

Last Updated: March 21, 2009 00:00 EDT