07-19-2010: What a CU 'Bailout' Really Means
On Saturday, Sept. 25, the Wall Street Journal headlines read that the government was backing $30 billion in bonds to bolster the corporate credit union system almost two years after the peak of the subprime lending crisis. On Friday, the National Credit Union Administration (NCUA) took over three corporate or wholesale credit unions in an attempt to stabilize a part of the industry that has been dealing with aftershocks created by Wall Street and the subprime mortgage market. The NCUA's actions are not a result of a failing credit union industry, but rather a concentration of investments within corporate credit unions backed by subprime mortgages. Officials at the NCUA said the plan will not cost taxpayers anything, credit unions themselves are shouldering the responsibilities.
Since the initial crisis, the NCUA has worked diligently to ensure that the corporate system doesn't falter. Credit unions--both corporate and natural person--have faithfully supported each other to make certain it is "business as usual" in serving the 90 million Americans who are credit union members. Credit unions did not receive any funds from 2008's $700 billion Troubled Asset Relief Program.
What is a Corporate Credit Union?
A corporate or wholesale credit union does not serve consumers directly. Only "natural person" credit unions offer loans and accounts to the public. Corporate credit unions provide services to natural person or retail credit unions. In short, they are the credit unions for credit unions and offer services that help retail credit unions process transactions, investment services, among other things. Consumer will not be directly affected by the NCUA's actions.
Your Deposits Are Safe
The NCUA's action does not mean that members' money is at risk. At Credit Union of Ohio, member accounts are insured to at least $250,000 by the NCUA with the full faith and credit of the US Government. Credit unions in Ohio remain stable, well-capitalized, and ready to meet the financial needs of Ohioans.
We're Still Lending
Proudly, Credit Union of Ohio has remained quite stable during the worst of the recession. We continue to offer competitive rates in all areas, but especially in Auto Loans, Credit Cards, and Mortgages. We continue to see many members moving their loans to us from other lenders or applying for new loans (there are some good deals to be had). When we're given the opportunity to make your loan, we're giving back in our local economy--and that helps everyone. Remember whatever your need--saving or borrowing or simple checking--Credit Union of Ohio is here to serve you.