Another dumb question from me. I saw this on the NCUA’s website: “No credit union may end its federal insurance without first notifying its members.” Does this mean that one day we could get an email or letter from a CU that says, “Please note that we no longer have NCUA insurance. Thank you for your business and have a lovely day”. Now that a lot of us here have recently maxed out with some CUs that may be on thin ice (you guys know the main one), I was sitting here with my prune juice thinking WTF and wondering if one day we could be caught naked with a ton of money that was insured yesterday but not today. Could such a thing even be possible? Seems implausible but so does so many other implausible things that become reality. But if there is any element of plausibility here, what’s the purpose and value of the insurance to begin with?
Answers
The instances I was remembering when I posted earlier might, indeed, have been state chartered credit unions and not FCUs. What you wrote makes more sense than what I was thinking earlier, that any CU could drop the NCUA insurance.
I've been sort of rolling this one around in my head . . . . where do I have money invested with an organization which is not an FCU . . . . I asked myself. First and largest one came to mind:
Alliant Credit Union
Alliant is Illinois chartered. It is NOT "Alliant FCU". Alliant of course carries NCUA insurance today. But as pointed to by txFish1, it might be easier for Alliant to drop that insurance than would be the case if it were Federally chartered. In fact:
I seem to remember several instances of "charter changing" over the years by both banks and CUs. And soon as the Federal charter goes away and becomes a state charter, there too goes the FDIC or NCUA mandate.
To be clear as I'm able, I certainly do not foresee any sort of mass dropping of Federal charters. Such as that would only happen beneath extremely exigent circumstances. But when you're US$34T in the hole and borrowing still more money like a drunken sailor, exigent circumstances cannot be ruled out.
I'm glad CDmanFL posted regarding this matter. There is a lot of food for thought here . . . . . . . stuff that makes you go "hmmmm".
possibility vs probability vs plausibility.
While everything is possible therefore plausible, if the concern here is about the probability of Losing Insurance AND Losing Deposits...
Then the best way to deal with it, isn't the Gold, it is a Prozac for some...Barrel Strength for others!
But ultimately make sure that you have a shovel AND a yard...the probability is high that you will not make it to the prepaid plot, with the Gold or without.
State Chartered CUs and Banks don't have to participate with NCUA or FDIC respectively, still they have the oversight by the regulators, still they have to continuously prove their financial soundness.
If the FI Business described in Corporate Charter/By-Law specifies the insurance Carrier, then it is per By-Law when material change is to be approved by Members or Shareholders respectively.
Federally Chartered FIs MUST maintain participation in NCUA or FDIC, no other option is given by Federal Acts.
"value of the insurance" is not in the eye of the Depositor-beholder. The Value of NCUA and FDIC is in Security, Stability and Predictability of the Financial System of the Nation.
The Value of NCUA and FDIC Insurances is in the eyes of Regulators and FI's Board of Directors, it is in the knowledge that Financial institution has an access to Central Liquidity Facilities.
Yet, however improbable it may look by design, in instance when SHTF, FRB and Congress have to step in.
I am more curious about Gold in such doomsday scenario.
Should I get it as physical metal, or as a paper, in form of promissory note, that I have it somewhere under my name locked thousands miles away in KY, SF, NY or London?
And if I get physically in coins, how many and what denominations?
And if I get it physically in bars, do I have to get the scale and the chisel, in case if surviving Neighbor agrees to exchange nuggets of it for the jar of Barrel Strength Moonshine?
Gold is available today in a variety of forms, eagles, bars, and so forth. I think most everything out there right now is, literally, solid gold. So why do I buy the eagles?
I'm thinking down the line, after the SHTF, there could be confidence lost by potential buyers in more common forms of gold. Such gold might become tinged, albeit likely unreasonably, with concern over plain bars for example being counterfeit, fake, not pure gold.
Again I'm quite certain even plain gold bars, bought today from a reputable seller, are 100% genuine and authentic. But it's not today I'm thinking about when I buy the eagles. It's after the SHTF I'm thinking about, when things could become a little crazy out there, with FUD (fear, uncertainty, doubt) spreading across the country. And I believe eagles are the best self-authenticating form of gold there is.
When you buy spot plus markup and sell scrap minus commission you would need FUD to extract Gold Value out of Coin.
Don't you think that SHTF, then 50 lb. sack of sugar or 5 lb. brick of yeast will worth more than $50 metal coin, of course you would need some copper and fire, but I'm sure "after the SHTF" there will be a lot of scrap to be repurposed.
I believe sugar plus yeast when heat to boil, will self-authenticate through copper piping as the best liquid ounces of currency.
I was out of munis very early in this century. Imagine my surprise when, circa 2008, both AMBAC and MBIA became seriously financially threatened during the collapse. To my way of thinking, the impossible had happened.
You're not into munis but CDs instead, like myself today. We rely on the FDIC and the NCUA now, much as I had relied on AMBAC and MBIA decades ago. But the FDIC and NCUA are no better than their sponsor, the USA itself, now US$34T in the hole, with the out of control red ink growing wildly daily and no end in sight.
So what will become of us, of our CD savings, if the SHTF? Figure on a sort of "bail in" where the FDIC and the NCUA confiscate, obviously without our permission, a portion of our "insured" savings in order to stabilize things. Looking for a way to avoid this?
Buy gold or, to be perfectly honest, I have been doing a little better recently with my platinum. Regardless, the wealth they represent is more closely under my personal control than my CD money. The government will have to send officers here to my house to confiscate my precious metals. And I am armed.
The first CU I got into -- and that was many years back, I can't even recall which one it was, did that exact thing. Ended their NCUA coverage after notifiying we members. The CU bought a well larger amount of private insuragce instead. I got out.
I don't know if I had a CD at the time. I can't tell you how they are handled if you want to get out, they probably at least have to allow you the option to close without penalty, although that still leaves you not attaining the APY you bought the CD for.
I don't recall if that one was state chartered or federally chartered, but if I recall correctly, it was in Northern California. What, if anything, they might have had to do as well re their status as a CU, I have no idea.