ALEXANDRIA, Va.-The NCUA Board voted this morning to extend an emergency order essentially allowing corporate credit unions to ignore the agency's minimum capital standards until the end of 2011.

The order will allow corporates to operate at the capital ratios they had at November 2008, before the failure of U.S. Central FCU wiped out as much as half of all corporate capital, putting all but three of the nation's 28 corporates in violation of regulatory capital minimums.

The extension will allow the corporates to operate at their current diminished capital levels until a year after NCUA's new corporate regulation becomes effective, which is not expected until later this year.

NCUA Chairman Debbie Matz said the extension of the forbearance on corporate capital is necessary in light of ongoing diminishment of capital among the corporate, which she said poses a "continuing threat" to the entire credit union system.

"We need to make sure that the system continues to function properly," said NCUA Board member Gigi Hyland.

The extraordinary order comes as at least three corporates, U.S. Central, WesCorp FCU and Constitution Corporate FCU, have had all of their capital eliminated, and several others are preparing to report a similar depletion of all capital.

Also this morning, NCUA reported it has increased the loss estimates on U.S. Central and WesCorp., the two corporate giants it has been running under conservatorship since March 2009, by $1 billion.

The NCUA Board also issued for comment a new rule easing interest-rate caps in short-term payday loans from the current maximum rate of 18% APR for all loans to 24%. The proposal would also set a $20 limit on application for payday loans of up to $1,000. "This type of loan is basically a break-even proposition," said NCUA Board member Michael Fryzel, of the effort to encourage more credit unions to offer the product.

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