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No Bank Failures But One Credit Union Liquidation


Yesterday was one of the few Fridays this year with no bank closures. However, a credit union was closed yesterday. Here are excerpts from the NCUA's press release:
The National Credit Union Administration (NCUA) was appointed liquidating agent of Rouge Employees Credit Union in Dearborn by the Michigan Office of Financial & Insurance Regulation on May 15, 2009. Effective May 18, 2009, Rouge Employees Credit Union members will be served by Chief Financial Federal Credit Union (formerly Chief Pontiac Federal Credit Union) of Pontiac, Michigan.

Chief Financial Federal Credit Union purchased and assumed Rouge Employees Credit Union’s assets, loans and shares, enabling Rouge’s members to continue to receive uninterrupted credit union service. Rouge’s declining financial condition led to the closure and subsequent purchase and assumption by Chief Financial Federal Credit Union. Rouge Employees Credit Union had $23 million in assets and served 6,200 members.

It appears all of the members' deposits are covered. There's no mention of deposits over the insured limits. The Michigan State regulators have a more informative press release. According to this press release, "all of their deposits are protected."

Another thing mentioned in the Michigan press release is that this was the nation’s fifth federally-insured credit union closure this year. There have been 33 bank failures this year. Most of the credit unions liquidated last year were even smaller than Rouge. It seems like large credit unions that are in bad financial shape are more likely to be placed into NCUA conservatorship than immediately liquidated. Recent examples include Eastern Financial Credit Union in Florida and the two corporate credit unions.

Thanks to the reader who mentioned this liquidation in the comments.

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