Credit unions weather tough market |
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"What we're seeing on a local basis is credit unions stepping into the breach and saying, 'We're willing to sit
down with you.' It's the old-fashioned model -- knowing the area where your customer lives, getting to know your customer, and being
able to go through it with them."
Although membership growth has remained fairly steady for the past couple years, some credit unions are seeing an
increase in applications, says Ray Springsteen, senior vice president for business development at Callahan & Associates in Washington, D.C.
"We've seen credit unions get more publicity recently. I spoke with a Seattle credit union yesterday that says its
membership growth is up 7 percent year-to-date. Most credit unions are focused on providing value to their members and not going out
looking for the quick money." (Watch video on joining a credit union.)
Are deposits insured?
The National Credit Union Administration wears two hats: It is the federal agency that charters and supervises federal credit
unions and it operates the National Credit Union Share Insurance Fund, which insures deposits in all federal credit unions and many
of the state-chartered institutions. Just as with banks, credit union deposits are insured up to $100,000 in regular share accounts,
and up to $250,000 in certain retirement accounts.
The regulatory agency says there have been nine credit union liquidations so far this year; no more than normal -- and
that not all are attributable to the mortgage crisis. Problems have been isolated, not systemic, and they hope to keep it that way.
"We have seen an increase in the level of delinquency and charge-offs, but they're still considerably lower than industry
averages," says NCUA spokesman John McKechnie. "It may have something to do with the fact that we've been issuing guidance to credit
unions since 2004, before the housing downturn developed, where we tried to make sure credit unions stayed on the right side of the
road when it came to mortgage lending."
A recent Wall Street Journal article, "Mortgage-Market Trouble Reaches Big Credit Unions," noted that "five of the nation's
largest credit unions are reporting big paper losses on mortgage-related securities."
Those institutions are corporate credit unions -- described by McKechnie as credit unions to credit unions. "There are 28
corporate credit unions. They help credit unions invest and stay liquid. They're monitored daily in terms of their balance sheet, their
outflows and liquidity. Liquidity is the primary factor that determines how safe and healthy an institution is. The liquidity positions
in those corporates are strong, but they definitely feel the draft that's coming in from some of the bigger problems in the credit industry."
McKechnie says the NCUA is continually monitoring for trouble spots and making every effort to ensure that examiners
anticipate difficulty before it materializes.
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