The first conservatorship that I reported on was in February when Huron River Area Credit Union in Michigan was placed into conservatorship. As I described it, a conservatorship means NCUA will run the credit union in an attempt to restore its safety and soundness and return it to members. Possible outcomes include a merger with a stronger credit union, the soundness issues may be resolved by the NCUA management and the credit union would be handed back to the members, or if there are problems too severe to resolve, it could be liquidated.
Members who have over the NCUA insured limits shouldn't lose anything. In the Cal State 9 announcement it was stated that "they are working with any individual members whose deposit accounts may exceed insured amounts to maximize coverage and minimize risk." It would definitely be wise for those members with over the NCUA insured limits to move that money out of the credit union or at the very least make sure the accounts are structured so that all deposits are under the limit. As in the case of the Huron River Area Credit Union, the situation has worsen under conservatorship as this Ann Arbor News October article described. So there's a chance the conservatorship may end with liquidation.
Regarding Cal State 9, this San Francisco Chronicle article received a quote from a California official who stated that the action was "related to the credit union's defaults on mortgages." Loan losses in the third quarter ending in September were $54.5 million, up from $17.5 million in the previous quarter. You can view more of the financials of Cal State 9 from this NCUA page.
When I reported on Cal State 9 last month, it had a 2 out of 5 star rating at Bankrate.com. I think this was based on 3/31/07 data. The latest rating based on 6/30/07 data is 1 out of 5 stars. BauerFinancial currently gives it a rating of zero based on 6/30/07 data.
Through much of last summer, Cal State 9 had been offering a special 6% 7-month CD. This rate went down to 5.50% APY last month.
Thanks to the readers who notified me of this news.