Dedicated to Deposits: Deals, Data, and Discussion

Velocity CU Members Approve Conversion to Private Insurance - Future of ASI?

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Velocity Credit Union
According to this American Statesman article, members of Velocity Credit Union in Texas have voted in favor to switch Velocity's deposit insurance from NCUA to private insurance from American Share Insurance Corp. (ASI). When I had asked a Velocity CSR last week about the vote, I was told the results would not be known until the end of January. I guess the credit union decided to release the results early. According to the article, the results must still be officially tabulated and approved by the NCUA. The approval required 20% of Velocity members to have voted with a majority voting in favor.

As I mentioned in September, the NCUA requires that a credit union that is dropping federal insurance allow its members to make a penalty-free early withdrawal on certificates. For more info on ASI, refer to my ASI review post.

ASI in Negotiations to Wind Down Its Business?

This is something very interesting that I read at Keith Leggett's blog. According to the Credit Union Journal, ASI is in negotiations with the NCUA to wind down its business. If this goes through, I would guess all ASI-only credit unions would switch to NCUA insurance. So the Velocity vote may not mean much. As I've been reporting, there have been questions about ASI's stability as large ASI-only credit unions experience financial problems.

Update 1/07/10: According to this NAFCU article, the NCUA is denying that they were discussing an ASI wind-down.
  Tags: Velocity Credit Union

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Comments
15 comments.
Comment #1 by Anonymous posted on
Anonymous
I wonder what was offered to sway the members to vote for the private insurance? A free taco?

I would have figured this never had a chance...

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Comment #2 by Anonymous posted on
Anonymous
When their membership and deposits dwindle down they will see the light. How to drive a credit union into the ground in one easy lesson.

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Comment #3 by Anonymous posted on
Anonymous
only foolish people will keep ther money there...

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Comment #4 by Anonymous posted on
Anonymous
I guess Velocity doesn't need a lot of deposit money right now. Why would anyone leave their money at Velocity?

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Comment #5 by Anonymous posted on
Anonymous
Note that that blog is operated by the American Bankers Association.

Can't read the article that he is pointing to -- subscribers only.

Can a subscriber pick off that paragraph and post it here?

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Comment #6 by Anonymous posted on
Anonymous
Ken,

Do you have a contact at ASI and verify (if they will tell you) if this is true? Me if ASI goes away that is good< I would like SF Fire CU to go NCUA and if this this true, I get what I want.

Thanks a great blog

1
Comment #7 by Anonymous posted on
Anonymous
The Keith Leggett Blog which is referenced in the post is financed by the American Bankers Association. The purpose of this blog is to bash the credit union industry. I checked past comments and his is extremely hostile to the industry. For example, he would like to end the practice of allowing credit unions to accept new members through associations. Banker Guy, in the interest of fairness and accuracy, I don't think you should be using him as a reference without disclosing his industry ties. I also doubt the accuracy of much of what he is saying.

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Comment #8 by Banking Guy (anonymous) posted on
Banking Guy
Yes, it's clear that Leggett is biased against credit unions. He does clearly state his affiliation with the ABA. The only reason I linked to Leggett's blog post is because he apparently had access to the Credit Union Journal article which mentioned this news on the ASI negotiations. Most of his post was a summary of the Austin Statesman article. I'll have to get a subscription to the Credit Union Journal.

1
Comment #9 by Anonymous posted on
Anonymous
NCUA has denied that it's in negotiations with ASI to wind down its business:
http://www.nafcu.org/Template.cfm?Section=News&template=/ContentManagement/ContentDisplay.cfm&ContentID=45202

1
Comment #10 by Anonymous posted on
Anonymous
Sorry that link to the NAFCU website didn't post correctly. Try this one and look for an article dated 01/07/2010:

http://www.nafcu.org/Template.cfm?Section=News&template=/customSource/newsArchivesView.cfm&year=2010&month=1

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Comment #11 by Anonymous posted on
Anonymous
Banking Guy ... seems like your blog comments truncate URL's ... that's why the last two links I referenced don't get you to the news article I just read on the NAFCU website.

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Comment #12 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the link. I've updated the post. The URL shortening service is.gd is useful when you have a long link.

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Comment #13 by cdozo (anonymous) posted on
cdozo
I just recieved an e-mail fom Velocity Credit Union here in Austin, Texas. It said, in part:


Member deposits to remain insured by NCUA 

"February 9, 2010

Dear Member,

As you know we recently asked for your support to consider converting the credit union's share (deposit) insurance provider from the National Credit Union Administration (NCUA), an agency of the federal government, to American Share Insurance (ASI), a credit union-owned private deposit insurer.

We are writing today to let you know that our Board of Directors has decided not to switch to ASI. We have informed both ASI and NCUA of our decision to remain with NCUA.

Your deposits are, and will remain, insured by the federal government."

There is more. You can read the whole e-mail at https://www.velocitycu.com/president_letter_asi.html.

I like the people I deal with at Velocity and I'm glad that the directors there have decided to stay with NCUA.

Thanks, Ken BDG, for keeping me up-to-date on what's happening with my credit union and where the good bank deals are.

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