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Effects Of The Corporate Credit Union Bailout On Regular Credit Unions

Thursday, October 7, 2010 - 2:01 PM
I know many don't like this ABA economist and his blog Credit Union Watch, but I thought his post on the effects of the corporate credit union bailout is worth a mention. In the post he makes the claim:
a well run (CAMEL 1 or 2) and well capitalized credit union had a higher premium assessment rate in 2010 than comparably situated FDIC-insured banks. The same is likely to be true for 2011 and 2012.

He references sources from the FDIC and NCUA websites. The NCUA document he references (FAQs on the bailout) shows how serious the corporate credit union problem could have become to regular credit unions if the NCUA didn't step in:
16. Why didn’t NCUA just let the free market decide the fate of
corporate credit unions?

The steps NCUA has taken to stabilize the corporate credit unions have been to protect the entire credit union system and the billions of payment transactions counted on by the 90 million credit union consumers. A disorderly resolution would have resulted in the failure of up to 30 percent of all natural person credit unions and much greater total loss.

This news is relevant to savers who depend on credit unions for competitive deposit rates. We might see fewer competitive rates at credit unions as credit unions deal with these higher premium assessments.
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Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
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