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Some Recent and Odd Credit Union Failures


Fridays are the typical days when the Feds close banks with the FDIC taking them over. Hopefully, August will be a slower month than July when three banks failed. In addition to Indymac Bank's failure, two western banks failed last Friday.

Banks are not the only ones being closed. There were two credit union failures in July. However, these weren't the typical credit unions. Both were very small. Meriden F. A. Federal Credit Union was closed on July 16th (NCUA's press release). The credit union only had 206 members and assets of only $337,968. New London Security FCU was closed on July 28th (NCUA's press release). This credit union was a little bigger, but it still was small. It had $12.7 million in assets and 365 members. This news article has some interesting aspects regarding New London such as their lack of computer use (they still posted accounts manually). Another odd aspect was the credit union's unusually large asset base for such a small membership.

Instead of immediate closure, it was common last year for larger credit unions to be placed into conservatorship. Two examples of this were at Huron River Area Credit Union in February 2007 and Cal State 9 Credit Union in November 2007. In the conservatorship, the NCUA will run the credit union in an attempt to restore its safety and soundness and return it to members. If the NCUA is unable to restore its soundness, they may liquidate it and/or merge it into another credit union. Both of the above credit unions were merged into other credit unions. For the case of Cal State 9, it was absorbed by Patelco Credit Union.

Thanks to the reader who emailed me the link to this New London Closure article.

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Huron River Area Credit Union