It was no small irony that moments after voting to bar corporate credit unions from investing in risky CDOs, the National Credit Union Administration (NCUA) Board gave its approval to a plan to shed as much as $50 billion in toxic MBS held by the corporate system by repackaging them for sale to the public as CDOs.

Under the so-called 'legacy assets' plan, NCUA will take the cash flows on these troubled bonds and aggregate them into new bonds. These CDOs (NCUA prefers to call them NCUA Guaranteed Notes (stock market ticker: NGN)) however, will carry the imprimatur of an NCUA guarantee. That is, they will be backed by the full faith and credit of the federal government.

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