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Financial Safety of Credit Unions

admin — Thu, 28 Aug 2008 18:58:36 +0000

Most of the focus of the mortgage crisis has been on banks, but according to this WSJ article, credit unions are also experiencing some major mortgage-related losses. However, the credit unions mentioned in the article are not the ones we deal with. They’re corporate credit unions which serve regular credit unions by providing investment services.

The article described five corporate credit unions which reported $5.7 billion in “unrealized” losses as of the end of May. It also describes how there is an effort to reclassify the losses and downplay their importance.

Individual credit union members appear to be mostly insulated from these problems. Regular credit unions that have deposited money with the corporate credit unions could see losses if the corporates fail. According to the article the last time a corporate credit union failed was in 1995, and the regular credit unions were eventually able recover their money.

The article mentions that 9 regular credit unions have failed this year. However, many of these failures have been tiny credit unions. The last one that failed was Port Trust FCU which had assets of only $461,000 (see NCUA press release).

The major regular credit unions seem to be healthy based on their recent financial ratings. Here are a few of the largest credit unions in the US (source) and their ratings based on 3/31/08 data:

Navy FCU – 5 stars at BauerFinancial, 3 stars at Bankrate.com
Pentagon FCU – 5 stars at BauerFinancial, 4 stars at Bankrate.com
Alliant CU – 5 stars at BauerFinancial, 3 stars at Bankrate.com
The Golden 1 CU – 5 stars at BauerFinancial, 4 stars at Bankrate.com

The vast majority of credit unions are federally insured by the NCUA, and this insurance is very similar to what the FDIC provides for bank deposits. I have more info and references on NCUA insurance in this post. Whether your deposits are held at banks or credit unions, it makes sense to stay under the federal insurance limits.

Credit Unions Open To Anyone

Northrop Grumman Federal Credit Union

admin — Thu, 28 Aug 2008 00:41:14 +0000

Northrop Grumman Federal Credit Union is offering 4.40% apy on a 60 month bonus term share certificate. The minimum deposit requirement for this certificate is $40,000. This yield is good for both regular and IRA bonus term share certificates.

Field of membership in Northrop Grumman Federal Credit Union is offered to Northrop Grumman employees, retirees, and their family among others. For those who don’t otherwise qualify for membership in this credit union, prospective members can become eligible through membership in the Southern California Historical Aviation Foundation (SCHAF). Membership in SCHAF is $25.

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Credit Unions Open To Anyone

admin — Fri, 04 Jan 2008 05:44:46 +0000

Here’s a list of credit unions that are open to all members:

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