# News & Current Events > Economy & Markets >  Are The Credit Unions Next? Your thoughts...

## angelatc

This is third-hand info..but the trail is reliable.

Some of the bigger credit unions are in trouble, as a result of bad loans.  

They are looking to the smaller credit unions to help them out.  The bigger credit unions want the smaller credit unions to borrow money from the bigger credit unions, and to pay a higher-than-usual interest rate to the bigger credit unions.

My first thought was that the smaller CUs should tell the bigger CUs to take a hike, but on second thought....at what cost?  Should the smaller, stable CUs do this, in order to keep the Fed from nationalizing them too?

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## acptulsa

Neat.

No, I don't see why the smaller CUs would want to help the bigger ones.  But I do understand how, in this age of socialization, they would feel more comfortable with the cushion...

How to counter the enemy, which is the government, when you don't know exactly what form the psychosis will take...?

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## Truth Warrior

*"If you want to understand, what's REALLY going on, just follow the money!"*

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## MsDoodahs

> My first thought was that the smaller CUs should tell the bigger CUs to take a hike, but on second thought....at what cost?  Should the smaller, stable CUs do this, in order to keep the Fed from nationalizing them too?


Damn.  Rock and a hard place for the smaller ones, isn't it?

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## gaazn

It will be hard for credit unions to survive with 15-20% unemployment.

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## surf

http://www.creditunions.com/Data/Cusearch/default.aspx

i've posted this before, but if you want to check out your local CUs balance sheet and other financial info - use the link above. CUs have long sought to build their balance sheets, and large CUs, in particular, have done this through mortgage lending. The CEOs, as a whole, seek to distance themselves from their peers through asset growth. "mine is bigger than yours." like bank CEOs, they tend to want to feel like bigger individuals based on the size of their balance sheets. and what better way to do this than to add mortgage loans at $250k rather than used car loans at $5k.

i used to be employed by a $8.5 billion CU as the investment portfolio manager and saw the investment portfolio shrink as all the proceeds were directed to mortgage lending. when i worked there i managed a $1.5B investment portfolio, assets were about $5b. now it's $8.5b w/investments $.9B and loans $7.2B

the old "people helping people" bit was corrupted by "consultants," imo.

anyway, check the balance sheets if you want to form an opinion of how healthy your local CU is.

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## Zippyjuan

Interesting. I always thought that the credit unions had less exposure to mortgages than banks.

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## surf

> Interesting. I always thought that the credit unions had less exposure to mortgages than banks.


most do. particularly small CUs. originating mortgages requires more capital and "experitise" than originating car loans. most CUs are very good at originating car loans, boat loans, RV loans, personal loans, etc. perhaps that is why the rumor appears to be about "large" CUs being in trouble. my CU even began to do "small business" loans, blew $5MM on a dot.com startup called CUBIWEB, and, oh yeah, gives member money to certain legislative campaigns and lobbyists....

wasn't that way when i began there.

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## Cowlesy

Hey Angela, check out the Flashing Siren on DrudgeReport

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## Texan4Life

Assets:  	$694,275,795
Loans: 	$274,495,739
Investments: 	$363,695,338
*Capital: 	$72,724,931
Members: 	60,270
12 Month Share Growth: 	20.65%
12 Month Loan Growth: 	17.17%
ROA: 	1.44%

Good or bad?.. i would think good?

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## kathy88

My small credi tunion just merged with a bigger one..... things that make ya go "hmmmmm"

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## Cowlesy

SLAM!  U.S. CENTRAL goes DOWN --- This was the SUPER Credit Union that controlled scores of credit unions nationwide, including my hometown credit union.

http://finance.yahoo.com/news/2-corp...-14707022.html

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## smsnead2

> SLAM!  U.S. CENTRAL goes DOWN --- This was the SUPER Credit Union that controlled scores of credit unions nationwide, including my hometown credit union.
> 
> http://finance.yahoo.com/news/2-corp...-14707022.html


What do you mean by control?  Can you elaborate on this please?  Are most local credit unions merely subsidiaries of these larger credit unions?  And how do you find out which ones are controlled by these larger ones?

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## Cowlesy

> What do you mean by control?  Can you elaborate on this please?  Are most local credit unions merely subsidiaries of these larger credit unions?  And how do you find out which ones are controlled by these larger ones?


Control in the sense the the corporate credit union that does all the clearing/processing for the natural person credit unions.  I am pretty sure the NPCUs have an interest in U.S. Central, as a few weeks before this, U.S. Central and NCUA were asking the NPCU's to pony up capital contributions (cash) to shore up U.S. Central's finances.

This is BIG.

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## smsnead2

> Control in the sense the the corporate credit union that does all the clearing/processing for the natural person credit unions.  I am pretty sure the NPCUs have an interest in U.S. Central, as a few weeks before this, U.S. Central and NCUA were asking the NPCU's to pony up capital contributions (cash) to shore up U.S. Central's finances.
> 
> This is BIG.


Thanks.  Do you know how to find out if an NPCU has direct exposure to one of these corporate CUs?  Or would all NPCUs be affected to some extent or another?

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## diggronpaul

> This is third-hand info..but the trail is reliable.
> 
> Some of the bigger credit unions are in trouble, as a result of bad loans.  
> 
> They are looking to the smaller credit unions to help them out.  The bigger credit unions want the smaller credit unions to borrow money from the bigger credit unions, and to pay a higher-than-usual interest rate to the bigger credit unions.


This is such BS.  This is financial warfare on the entire world.  These criminals want to control all financial instruments globally.   This is insane.

_ "The NCUA staff recently completed a "stress test" of the mortgage- and other asset-backed securities held by all corporate credit unions, including U.S. Central and WesCorp, and found that "an unacceptably high concentration of risk" was contained in those two institutions"_

The individual CU's can handle this themselves.  The criminal FIRE sector is now planning to take over all credit unions so they can gain control over their assets.  That's all.  They are independent non-profit organizations for god-sake, let the members deal with this without government intervention.

If these guys gain control over all financial instruments globally, how does anyone operate outside their system?  Everyone's wealth is under their control, and therefore they control everyone.

If people can't see the writing on the wall by now then there is not help for them anymore!

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## bobbyw24

Three banks, two corporate *credit unions taken over by regulators in evening* 

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http://www.marketwatch.com/news/stor...siteid=yahoomy


Calamitous day sees banks, credit unions seized
Three banks, two corporate credit unions taken over by regulators in evening
By John Letzing, MarketWatch
Last update: 8:06 p.m. EDT March 20, 2009
SAN FRANCISCO (MarketWatch) -- The pace of the ongoing credit crisis quickened significantly Friday when regulators seized three banks and placed two large corporate credit unions into conservatorship, citing a need to "stabilize the corporate credit union system."
Banks in Colorado, Georgia and Kansas were closed by regulators, bringing the number of bank failures this year to 20, while the National Credit Union Administration Board seized corporate credit unions in California and Kansas that have a combined $57 billion in assets. Corporate credit unions are chartered to act as a sort of clearinghouse for the credit unions that serve consumers. 
The Federal Deposit Insurance Corporation said that Stockbridge, Ga.-based FirstCity Bank was closed by regulators, adding that it will mail checks to FirstCity's insured depositors Monday morning. 
The failed bank's direct deposits from the federal government such as Social Security and veterans' payments will be transferred to SunTrust Banks Inc. (STI:















12.05, -0.61, -4.8%) , the FDIC said. FirstCity had $297 million in assets 
and $278 million in deposits as of March 18, the FDIC reported. It also had roughly $778,000 in deposits that exceeded the federal deposit-insurance limit of $250,000. 
FirstCity becomes the eighth Georgia-based bank to fail since the economy began sliding into crisis last August, according to FDIC data. The last Georgia bank to fail was Freedom Bank of Georgia on March 6, the regulator said. It estimated the cost of FirstCity's failure to the deposit insurance fund as roughly $100 million. 
The FDIC also said Colorado Springs-based Colorado National Bank was closed, and Texas-based Herring Bank will assume all of the failed bank's deposits. 
Colorado National had $123.5 million in assets as of Dec. 31, and $82.7 million in deposits, the FDIC said. It estimated the cost of Colorado National's failure to the deposit insurance fund as roughly $9 million. 
Paola, Kan.-based Teambank also was closed by regulators, the FDIC said, while Missouri-based Great Southern Bank will assume its deposits. 
Teambank had $669.8 million in assets as of Dec. 31, and $492.8 million in deposits, the FDIC said. It estimated the cost of Teambank's failure to the deposit insurance fund as roughly $98 million. 
Meanwhile the National Credit Union Administration said Lenexa, Kan.-based U.S. Central Federal Credit Union and San Dimas, Calif.-based Western Corporate were placed into conservatorship "to protect retail credit union deposits and the interest of the National Credit Union Share Insurance Fund." 
U.S. Central has roughly $34 billion in assets and WesCorp has $23 billion in assets, the NCUA said. 
The NCUA said that service continues uninterrupted at both large corporate credit unions, and members are free to continue making deposits and accessing funds. 
"Credit unions that serve consumers remain very strong, with net worth exceeding 10 percent of assets, healthy growth in assets, membership, and loan portfolios despite the difficult economy," according to the regulator. 
John Letzing is a MarketWatch reporter based in San Francisco.

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## surf

> Assets:  	$694,275,795
> Loans: 	$274,495,739
> Investments: 	$363,695,338
> *Capital: 	$72,724,931
> Members: 	60,270
> 12 Month Share Growth: 	20.65%
> 12 Month Loan Growth: 	17.17%
> ROA: 	1.44%
> 
> Good or bad?.. i would think good?


what's the name? you can look deeper into these reports and see mortgage exposure, fair value of investments held, etc. if these figures are the most recent (12/08), it's not that bad. good capital ratio and share growth above loan growth isn't a bad thing. the ROA is exceptional in these times.

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## Cowlesy

> Thanks.  Do you know how to find out if an NPCU has direct exposure to one of these corporate CUs?  Or would all NPCUs be affected to some extent or another?


You can probably ask your credit union, or check their website to see what their Corporate Credit Union is.  

http://online.wsj.com/article_email/...DUyOTAxWj.html




> NCUA had said it would make up the expected losses in the insurance fund by dunning the nation's thousands of retail credit unions. But after an outcry from the industry, Mr. Fryzel said the agency's board now plans to ask Congress in the coming week for authority to borrow money from the Treasury. He said the industry isn't looking for a bailout, and would repay all such borrowings.

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## Cowlesy

This guy's blog, he must be some sort of Credit Union insider, is probably the best analysis of the situation I have found.

http://unrealizedlosses.blogspot.com/

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## Cowlesy

//

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## angelatc

Our credit union just merged, but that was an unfortunate side effect of the failure of the business who's members it was formed to serve.

The banks have been trying to "get" the credit unions for years.   Looks like this time they're going to win.

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## surf

As a side note, most states have corporate credit unions. corporate CUs are allowed to invest in securities that regular credit unions are not. from my experience, most regular CUs have deposits in corporates and required to keep a certain balance in them (based on deposits) to do business with them. deposits are most often in the form of term CDs. the corporates call the required deposits "member capital accounts."

my guess, being a guy that did a good amount of business with Wescorp, is that CUs that did much business with corporates purchased term CDs that are yielding higher than the corporates are earning on their investments they used the CDs to fund.

Angelatc is right: banks have long sought to remove the non-profit status from the credit unions which consider themselves "financial cooperatives." as credit unions have strayed from their original business models of the savings and consumer loan business into other businesses, banks have apparently seen this as an opportunity to attack. one item banks have always complained about is that CUs were not required to abide by CRA requirements. but another area is that CUs have become involved heavily in, among other things, mortgage and home-equity lending, investment advice, and even (in the case of my former employer) _small business loans._

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## Shinerxx

Performance Profile (Data as of 4Q, 2008)
Assets: 	$700,344,366
Loans: 	$481,606,519
Investments: 	$175,507,285
*Capital: 	$66,131,990
Members: 	91,982
12 Month Share Growth: 	-2.27%
12 Month Loan Growth: 	1.55%
ROA: 	0.52%

What do you think of my CU?

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## surf

> Performance Profile (Data as of 4Q, 2008)
> Assets: 	$700,344,366
> Loans: 	$481,606,519
> Investments: 	$175,507,285
> *Capital: 	$66,131,990
> Members: 	91,982
> 12 Month Share Growth: 	-2.27%
> 12 Month Loan Growth: 	1.55%
> ROA: 	0.52%
> ...


long (and perhaps not very helpful) answer below:

provide the name, please (Firstmark?). dive deeper into the reports and you can find a good amount of information.

- sidenote: these numbers may not match up with all CUs, i was looking at BECU

on the statement of condition add lines 19 and 20 for "real estate exposure." see line 25d for total forecloseres, and pay attention to line 31 (loans granted YTD). for corporate credit union exposure see lines 9-11 along with 2a (generally overnight "fed fund" investments). Firstmark appears to have more auto loans than RE loans, this may be a good thing, it may not. The ROA seems to suck, but perhaps they have chosen to set aside reserves for loan loss which, if i remember correctly, negatively affects ROA. share growth declining is troublesome to see, but with decent marketing they should be able to draw deposits from competing banks.

for most of the CUs reporting the data only seems to be through 9/08. 4Q08 should be provided shortly and may be ugly.

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## FreedomFighter8008

http://www.msnbc.msn.com/id/29812143/

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