Posted on 01/29/2009 7:18:51 AM PST by rabscuttle385
BY MARK MAREMONT
In the latest effort to prop up a sector of the finance industry, federal regulators on Wednesday guaranteed $80 billion in uninsured deposits at the powerful institutions that service the nation's credit unions -- a maneuver that shows how the economic crisis continues to ripple across the U.S.
Regulators also injected $1 billion of new capital into the largest of these wholesale credit unions, U.S. Central Federal Credit Union of Lenexa, Kan., after the firm on Wednesday posted an unexpected $1.1 billion loss for 2008. U.S. Central serves essentially as a main clearinghouse for the others in the network.
The vast majority of regular credit unions -- the bank-like cooperatives familiar to millions of account-holders nationwide -- are considered financially sound. Wednesday's moves affect only these wholesale credit unions, which number 28 and operate in the background to service regular credit unions.
In general, credit unions are considered to be among the most conservatively managed financial institutions. Nevertheless, a few of the wholesale credit unions have been hurt by losses on mortgage investments. As a result, regulators took action to minimize the chances of pain spreading.
The National Credit Union Administration, the industry's federal regulator, announced the steps late Wednesday after a special board meeting called at short notice. "We are trying to institute confidence in the system, and we think this will do so," said Michael E. Fryzel, NCUA's chairman, in an interview.
(Excerpt) Read more at online.wsj.com ...
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Man, we’re just magically creating money to solve all our problems. I have a feeling we’ll see a couple new presidential faces on US currency in the coming years. Carter would be perfect on the one million dollar bill.
The reminds me of the Bush 41 bailout of the Savings and Loan industry squared. The bill just keeps getting bigger and bigger with no end in sight.
A lot of CUs have branched out beyond their affiliated company or union they were attach to. I think this has helped them be more stable since they are not affected so much by lay offs as in the past. I know my CU went through turbulent times back in the early 90s when LTV got cut up.
That ought to be funny but, somehow it is not.
Carp ... I thought Credit Unions were a safe haven of fiscal responsibility as evidenced by that magnificent article from the head of the GTE Federal CU.
Should that not be, At one time they were cosidered.................Not anymore
They are, its the back end servicing companies that appear to be in trouble. Most CUs share resources via joint networks.
Especially since it will be worth enough to buy a jar of peanut butter.
Understood, but I thought the camel would be kept out of the CU’s tent and it appears the nose is coming in through the back end. Ouch!
bfl
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