Two Corporate Credit Unions Taken Over by NCUA

Late Friday, March 20, we learned that the National Credit Union Administration (NCUA), which is our industry's federal agency that oversees credit unions, placed U.S. Central Credit Union in Lenexa, Kansas and Western Corporate Credit Union in San Dimas, California, into conservatorship to stabilize the corporate credit union system.  Both of these credit unions are "wholesale" or "corporate" credit unions that do not serve consumers.  The NCUA's actions have no impact on you, the members of Vantage Credit Union.

"Retail" credit unions, like Vantage, are considered to be among the most conservatively managed financial institutions with healthy net worth.  However, some "wholesale" or "corporate" credit unions have been hurt by losses on mortgage investments.  As a result, federal regulators took action to minimize further losses in the corporate credit union network.

Articles in Yahoo Finance and STLtoday.com state, "...retail credit unions, which are cooperatives owned by their members, remain financially strong – with net worth exceeding 10 percent of assets, and sustained growth in assets and membership despite the deep recession."

The above quote is important to remember.  Vantage Credit Union is a "retail" or "natural person" credit union that is very safe, strong and healthy.  

Some other important points about NCUA's actions:

• The two "corporate" or "wholesale" credit unions that were taken over by NCUA are not "retail" or "natural person" credit unions.
• There are 28 "corporate" credit unions in total, providing liquidity and other services -- like check processing -- to "retail" credit unions.
• "Corporate" credit unions operate in the capital markets and hold highly rated investment grade securities.  But, like many others in these markets, they have seen the value of their investments decline in the current economic downturn, resulting in actual losses.
• These two "corporate" credit unions realized investment losses large enough that the NCUA stepped in to ensure stability in the corporate credit union network.

 
What does this mean for Vantage Credit Union and you, our members?
It's business as usual. You will continue to enjoy the same level of service and security.  Remember:

• Your deposits at Vantage are federally insured to at least $250,000 (see Jim's post for more about this).
• Our service to you is not affected by these government actions
• Credit unions have been serving members in the U.S. for 100 years, in good times and bad.
• Vantage Credit Union's net worth is very strong

Let me know if you have any questions about corporate credit unions, NCUA's actions, or how it relates to Vantage.