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CU System
CUs make most of their soundness in media
MADISON, Wis. (8/19/08)--Credit unions continue to make the most of the opportunity from banks' failures to explain their soundness for the media. PeoplesChoice CU, a $125 million asset credit union based in Saco, noted that bank failures have prompted Maine consumers' concern about the safety of their funds in Maine's credit unions. "The failure of Indymac and others has its roots in some very aggressive and questionable mortgage loans including no down payments, now verification of borrowers' income, loans made to borrowers with poor credit, and artificially low payments for a short time with a large upward adjustment," said a press release from the credit union. "At PeoplesChoice CU, we never participated in this type of lending. In fact, we have no mortgages in foreclosure today and have not had one in over 20 years," the credit union said. The credit union suggested that now is a good time for consumers to review their accounts to maximize insurance coverage. It directs consumers to review the balance sheet and income statement of their financial institution online at www.ncua.gov or www.fdic.gov. "Over half a million in Maine belong to credit unions and they should feel assured that their money is safe," said PeoplesChoice CU. Saugus Advertiser (Aug. 15) also wrote that deposits in Saugus (Mass.) FCU are safe. Saugus FCU President John Smolinsky explains that members should know their credit union deposits are insured up to $100,000 and their individual retirement accounts (IRAs) are insured up to $250,000 by the National Credit Union Share Insurance Fund. Also, the deposits are insured with an additional $500,000 to $550,000 in Excess Share and Deposit Insurance coverage through the Massachusetts Credit Union Share Insurance Corp. (MSIC). "I am pleased to report that no member of an MSIC-insured credit union has ever lost any of their savings," Smolinsky said. "SFCU has made sure that no portion of your share or deposit account will be uninsured." Portsmouth (N.H>) Herald News also looked at the Indy Mac fallout and wrote about the deposit insurance that credit unions have Seacoastonline.com (Aug. 17). Author Elaine Morgillo, president of Morgillo Financial Management Inc. based in York Maine, and North Andover, Mass., wrote that to date, no depositor has ever lost FDIC or NCUSIF-insured funds as a result of a failure of an insured bank or credit union. Citizens Equity First CU (CEFCU) in Peoria, Ill., educated the Peoria Journal Star (Aug. 9) columnist Paul Gordon about the limited exposure it has had to the subprime crisis. CEFCU President/CEO Mark Spenny told Gordon that the credit union is "very strong" and that the subprime loan situation is non-issue for CEFCU and other local institutions because they didn't participate in subprime or the more exotic loans. At a time when mortgage delinquencies were skyrocketing across the nation, the credit union's delinquency rate dropped, he said. Spenny also explains credit unions' deposits are insured.
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