Credit unions have provided a serious alternative to banking with big banks. Their strength in their communities commands a market share that the big banks want. So this news is ominous. Given what I know about credit unions around the country, the theory of financial problems does not make sense. Besides, we did not seize AIG, Citibank or Goldman Sachs. We just gave and lent them $12 trillion.
If you know the real story here, I would love to hear it.
U. S. seizes top credit union clearinghouse
Excerpt:
WASHINGTON, March 20 (Reuters) – Regulators seized the top clearinghouse for U.S. credit unions, citing a critical deterioration in the finances of the provider of services to thousands of retail credit unions.
The National Credit Union Administration (NCUA) took control of U.S. Central Federal Credit Union, a huge wholesale credit union with about $34 billion in assets based in Lenexa, Kansas.
It also seized Western Corporate (WesCorp) Federal Credit Union of San Dimas, California, another corporate credit union with $23 billion in assets.
Has anyone bothered to look at the capital these institutions had historically? They were very thinly capitalized for years and did not have much room for negative earnings. Perhaps it is a conspiracy, or perhaps it is a basic failure of the relevant regulator to keep risk levels constrained. I’m seeing a common thread becoming apparent….deregulation of the financial sector has been an utter failure and has brought our country to the brink of revolution. I’m basically a libertarian and loathe state regulations, but the pragmatic side of me says the various financial sectors need strong regulation. Perhaps my grandmother was right when she told used to tell me…”Some people are just no good”. As a child and young man I just thought she was bitter, but as I get older Grandmother seems to get wiser.
From my credit union:
“Dear Member:
In the midst of ongoing reporting of many of the difficulties some financial institutions are having in today’s troubled economy, you may have read of the decision by the National Credit Union Administration (NCUA) to place into conservatorship two wholesale corporate credit unions, US Central Federal Credit Union and Western Corporate Credit Union. We want to assure you that these actions do not impact you as a member of Affinity Federal Credit Union. Our credit union remains safe, sound and strong.
The two institutions that were placed into conservatorship are corporate credit unions. Corporate credit unions do not serve consumers. They are chartered to provide products and services only to the credit union system. These products and services will continue uninterrupted. There is no impact on any of the 90 million credit union members nationwide or to the members of Affinity.
Credit unions remain extremely strong, even during these challenging economic times. Nationwide, credit union net worth is at near all time highs. Of more importance to you, Affinity’s net worth continues to remain strong and every depositor is insured by the full faith and credit of the US Government through the NCUA insurance fund to a maximum of $250,000.
Our commitment is first and foremost to you – our members. It is because of this commitment we continually strive to give you the best service and a financially sound Credit Union.”