Don't they usually look to MERGE with another CU? But if the CU is showing a negative balance, I would not want that CU to merge with MY CU!
A bank could consider buying another failed bank as a marketing risk or investment risk. Not sure how it works for a CU “buying” another CU.
Who gets paid?
Not the stockholders.
Maybe the Govt. eats the bad debt and the good assets are merged?
They would be "merged" or sold to another credit union, but not a 'bank.' Totally independent systems. They do not mix.
Don't they usually look to MERGE with another CU? But if the CU is showing a negative balance, I would not want that CU to merge with MY CU!
The NCUA (the CU version of FDIC) would dictate terms, most likely. Not likely would two weak CUs be merged.
Who gets paid? Not the stockholders. Maybe the Govt. eats the bad debt and the good assets are merged?
Deposits are insured up to 250K. There is no stock or equity in a credit union. The 'owners' of a credit union are the members. All profits are returned to the members via better loan rates or savings earnings.
I would imagine if a merger were to happen, the failed credit union's depositors would be paid off and the bad loans would be transferred to the combined entity at some reduced value. The new entity would try to collect what they could on those loans. The NCUA eats the loss.
Let me add that our little organization ($12 million in assets)is an antique. We do not sell our loans. We don’t do checking, credit cards, ATM’s, etc. All we do is savings accounts, IRAs, car and boat loans, signature loans, and home loans.
There aren’t too many like us any more. The board (mostly old white guys) wants to keep it old fashioned. We offer the extra service of working with members that get in a jam if they’ve been loyal and good customers.