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SW Corporate Frustration with banks fuels deposit surge
FARMERS BRANCH, Texas (3/8/10)--The first quarter usually means an increase in liquidity at credit unions--but last year, the liquidity surge of the first quarter never abated, according to the Texas Credit Union League. A number of reasons have been suggested to explain the rise in liquidity--but one that has not been mentioned is anger with banks, the league said. “There is a lot of anecdotal information that points to consumer frustration--and even anger--about banks,” said Dan Abdill, senior investment officer at Southwest Corporate Investment Services (LoneStar Leaguer March 5). “Consumers are mad at banks and are putting their money into credit unions,” he said. In 2009, $72 billion “poured into credit unions,” according to the league, citing data from the National Credit Union Administration. Of that amount, $14 billion came in the fourth quarter. Stock market uncertainty coupled with the low--or non-existent--rates of return offered to depositors may also play a part in the liquidity surge. “But I tend to think people are voting with their pocketbooks, and they are voting for credit unions,” Abdill said. The article cited three studies indicating consumers’ dissatisfaction with banks and satisfaction with credit unions: the University of Michigan’s American Customer Satisfaction Index, and a study conducted by J.D. Powers and Associates in 2009, and the American Customer Service Index (ACSI). Last year, Southwest Corporate helped credit unions place more than $3.6 billion in term certificates, bank CDs or bonds through its brokerage services department. It also helped more than 700 credit unions complete more than 6,500 investment transactions. “2009 was a very busy year; 2010 looks to be even more so,” Abdill said. Abdill added: “One of the trends we see as credit unions are looking to maximize the return on their investment portfolio is more of them placing funds in bonds. Throughout 2009, and now into this year, we have seen a consistent increase in credit unions investing in agency bullet and callable securities, as well as agency mortgage-backed securities.”


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