The nation's credit union system is tiered. We have several thousand retail credit unions in the country of all sizes & persuassions. Then, in the background, there are "wholesale" credit unions. These institutions operate behind the retail scene but are, nevertheless, important to the system. They supply banking services to the retails & are known as "corporate" credit unions within the industry.

US Central Corporate Credit Union had their own little meltdown, unexpectedly, in Q4 '08. As a result, the NCUA has infused $1B into US Central. They are also guaranteeing retail credit unions' deposits at all corporate CUs not just US Central.

In order to recover their costs, the NCUA, is increasing the fee charged to each retail credit union for participation in the deposit insurance program.

The bailout itself will not affect retail customers. But (there's always a "but")...this fee increase is quite substantial. It is likely going to be difficult for some (many?) credit unions to pay without deteriorating their financial statements. However, it is generally understood from the agreements that NCUA will not take down any retail credit union in the event this assessment deteriorates their capital position. Most credit unions have more than adequate liquidity but it could impact their capital/net worth position. Last week, the NCUA did request credit unions be included in TARP money. To my knowledge, there's no answer yet for that question.

Mostly, I just want to give a heads-up to forum members that credit unions are not immune to having their own mortgage-backed security problems. Remember, retail credit unions members' funds are guaranteed by NCUA up to $250K same as the FDIC. No need to close accounts. But don't be surprised to hear about mergers.

Generally, though, the biggest drag on credit unions are personal bankruptcies.

In 2009, the biggest drag on credit unions will be this assessment from NCUA.

/t

We have funds from three different trusts in a credit union. Did this after our CPA said to keep fund in smaller amounts in different intuitions. At this point I have to keep a separate spread sheet just to keep track of everything. Between our trust and my father’s plus a bypass I need a secretary just to open statements and file.LOL

My concern is what will happen if everything goes really bad and the FDIC and NCUA can’t cover everyone or decide to change the rules in mid stream. Not too worried about it but in this financial climate I don’t think anyone can say for certain what may or may not happen.

It will also depend greatly on the field of membership being served by an individual credit union as to whether this assessment outstrips losses through bankruptices/other nonpayment of member debts that are eventually written off.

Also, I don't see any indication as to how much NCUA is increasing the fee to pariticpating credit unions.

kframe, with the above news show hanging out there I'm not thinking this is a good time to talk about "how much". It is a big number & it is subject to change.

I wish this darn story would have already aired & I wish I didn't have duct tape over my mouth. But, it hasn't & I do. Actually, I sincerely hope that this piece of ambush reporting is reconsidered by this major news organization & never airs. There's a witch hunt in the country these days for financial institutions & it seems nobody's immune.

Credit union deposits are safe, Sue. Credit unions have, thus far, escaped the bad press of the meltdown. That's going to change but there's no need to worry about the safety of funds for the retail customer.

/tricia