We’ve said it before and we’ll say it again: Credit unions often offer some of the best deals in banking. But on Friday night, federal regulators seized two corporate credit unions with assets totaling $57 billion. So what does that mean for the sterling rep credit unions have managed to build?
The two institutions put into conservatorship, US Central Federal Credit Union in Lenexa, Kansas, and Western Corporate Federal Credit Union in San Dimas, California, did not actually serve consumers directly. Rather, they acted as clearinghouses, offering loans and other services to retail credit unions. According to the National Credit Union Administration, the federal body that overseas credit unions, both US Central and Western Corporate held “an unacceptably high concentration of risk” and federal seizure was required “to protect retail credit union deposits.” NCUA says that despite the seizure, both will continue offering services.
If you’re one of the 90 million credit union members nationwide, don’t panic in the face of this news. You deposits are safe. The NCUA, like the Federal Deposit Insurance Corporation, insures all credit union deposits, usually up to $100,000. And, like the FDIC, the NCUA increased its coverage to $250,000 until December 31, 2009. Just make sure that you see the NCUA logo pictured here on your credit union’s web site. If you’re unsure whether your credit union is a member (98% of them are), NCUA’s web site offers a tool that helps you check. You should also use the Electronic Share Insurance Calculator to make sure all your credit union deposits are covered. (Just like FDIC insurance, deposits at any one institution exceeding $250,000 are not covered unless those accounts fall in different ownership categories. Doublecheck yours with ESIC.)
Bottom line: You’re still going to find low fees and good deals at credit unions. As long as your institution is federally insured and your deposits fall below the insured limits, you can rest easy.