| Tuesday, November 24, 2009 |  |
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Special Bulletin: 'Business as Usual' for Credit Unions After Government Takeover of Two CorporatesWASHINGTON (March 22, 2008)—It's business as usual at credit unions following the takeover Friday of two "big credit unions" by government regulators. The credit unions, U.S. Central Federal Credit Union, Lenexa, Kan., and WesCorp Federal Credit Union, San Dimas, Calif., are unlike credit unions that serve consumers. Twenty eight wholesale institutions, like those taken over, provide liquidity, investment, and payments services to credit unions serving consumers. Two of these "corporate" credit unions were placed into conservatorship, which means they still are operating normally but the U.S. government has taken them over. The same level of quality service you receive from your credit union will continue; it and its service to you is not affected by these government actions. Because of the nature of what they do, corporate credit unions operate in the capital markets and hold highly rated, investment grade securities. Investment values have declined in the economic downturn, resulting in some actual losses, as so many others in those markets have experienced. In the case of the two corporate credit unions written about in the press, the losses were significant enough that the government had to step in. Deposits that regular credit unions have in these corporates are federally insured up to $250,000 and backed by the full faith and credit of the U.S. government. And the government has guaranteed deposits beyond $250,000 in these institutions. No credit union member has ever lost a dime of federally insured funds.
Your own funds are perfectly safe in your credit union. Your accounts in a federally insured credit union are backed by the National Credit Union Share Insurance Fund (NCUSIF), a fund maintained by the U.S. Treasury and administered by the National Credit Union Administration (NCUA). Federal insurance protects your money in share savings, share draft/checking, money market, share certificate, trust, and retirement accounts. The NCUSIF is backed by the full faith and credit of the U.S. Government, just as the FDIC does for bank deposits. No credit union member has ever lost a dime of federally insured funds. The credit union sector overall is solid and healthy. The industry's federal regulator, Michael Fryzel, chairman of the NCUA, reaffirmed that Friday when addressing the corporate situation: "Credit unions that serve consumers remain very strong," Credit unions nationally are very well capitalized, with an average capital-to-assets ratio of more than 10%. That's considerably higher than the 7% industry standard for being "well capitalized." This 10% capital level means credit unions are well positioned to absorb the costs of this action by the agency, which intends to charge higher deposit insurance premiums to offset the costs, with minimal outward impact on members. 
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