And now, a Credit Union bailout
January 28, 2009 | alternatives, industry, personal finance | Comments (0)From Thursday’s Washington Post:
The government also will guarantee billions of dollars in previously uninsured deposits in a move that aims to forestall a crisis of confidence in a system once considered unshakable due to its conservative business practices.
The National Credit Union Administration, which regulates the industry, said it was acting to protect the nearly 90 million Americans who use a retail credit union. Most of those institutions have deep financial ties with the company that is getting the bailout, U.S. Central Corporate Federal Credit Union.
The federal aid comes from assessments on the industry, not from taxpayers.
This latest rescue has a familiar plot. U.S. Central invested in mortgage-related securities advertised as safe and lucrative. They were not, and U.S. Central is running out of money, endangering the financial health of many of the nation’s 8,400 credit unions, even as demand for their loans has reached record heights.
An industry with “conservative business practices” has “deep financial ties” to a company that doesn’t. That would seem to be a contradiction.
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