Ping.
I chair my credit union board. We learned about this a week ago. The credit union industry is not protected directly from the federal govt like banks with the FDIC. We are a member owned organization that support each other. The main bank IS our FDIC. The next layer of membership is at the state level in which there are something like 28 of these (not each state has one). Credit Unions are members of this second tier. We borrow from this second tier, this second tier borrows from this large unit. They are hurting from this economy since any funds are invested. Fortunately credit unions investments are more controlled than most banks.
The article is correct, smaller and under capitalized credit unions may collapse. Fortunately my credit union is solid due to our management principals. however, we anticipate a negative income rate this year. Basically, our assessment equals what our projected income was to be.
We set our budget in December and we tie in management and employee incentives to ratios that will be affected by this decision. Our employees stand to lose due to this decision but our members and their money will be fine.
I will be presenting this issue next month at our annual meeting. For us we are at least able to get out in front to our members.
Support your credit union as they are generally managed more conservatively than banks. Most people have access to a credit union.