MADISON, Wis. (10/1/08)--It's okay to be concerned about the U.S.'s financial turmoil, but consumers should sit tight, according to one credit union president/CEO.
The country's economic problems are too large to simplify, and it is too early to know their impact, Navigator CU President/CEO Laurin Avara told WLOX in Pascagoula, Miss., where Navigator is based.
Money at credit unions is insured by the federal government, Avara said. He also encouraged concerned families to meet with a financial planner to discuss assets (WLOX Sept. 30).
Navigator does business "the old conservative way," which has led to fewer losses. Avara said he is hopeful that the nation will pull through and that consumers can "look for opportunities in this," he told the news outlet.
Much of the media's reporting has focused on the safety and soundness of investment companies and banks, while credit unions "continue to provide a safe haven for consumers," wrote William Lavage, president/CEO for Service 1st FCU, Danville, Pa. in a letter to the editor of The Daily Item.
He noted that credit unions were formed after the Great Depression in the 1930s to help consumers afford financial services, and reiterated that credit unions are backed by the National Credit Union Administration and the federal government.
"Credit unions are the stewards of their members' hard-earned money and take that responsibility seriously," he said. "Investments are made conservatively, and credit unions cannot be bought and sold as commodities."
Service 1st has $129 million in assets. Navigator has $197 million in assets.
courtesy of cuna.org
Thursday, October 2, 2008
Suze Orman on Today: Deposits with CUs are fine
NEW YORK (10/1/08)--TV Personality and Federal Deposit Insurance Corp. (FDIC) spokesperson Suze Orman has taken note of the Credit Union National Association's (CUNA's) reminder that credit unions have federal insurance backed by the full faith and credit of the U.S. government.
During a broadcast about the rescue bailout of the financial industry Monday on CNBC's Today Show, Orman twice noted that credit unions are insured by federal insurance, which is backed by the full faith and credit of the U.S. government.
"If funds are insured by FDIC, if your money is in a credit union and it's insured, if it's in Treasuries, then you're fine," Orman said. She reemphasized later that credit unions are insured by the National Credit Union Administration.
Orman also featured an item on her website about credit union insurance after CUNA informed her last week that credit unions have federal insurance just as good as the FDCI.
During an appearance last week on The Oprah Winfrey Show," Orman told consumers to make sure their institution was insured by the FDIC but failed to mention NCUA's insurance fund for credit unions, the National Credit Union Share Insurance Fund.
courtesy of cuna.org
During a broadcast about the rescue bailout of the financial industry Monday on CNBC's Today Show, Orman twice noted that credit unions are insured by federal insurance, which is backed by the full faith and credit of the U.S. government.
"If funds are insured by FDIC, if your money is in a credit union and it's insured, if it's in Treasuries, then you're fine," Orman said. She reemphasized later that credit unions are insured by the National Credit Union Administration.
Orman also featured an item on her website about credit union insurance after CUNA informed her last week that credit unions have federal insurance just as good as the FDCI.
During an appearance last week on The Oprah Winfrey Show," Orman told consumers to make sure their institution was insured by the FDIC but failed to mention NCUA's insurance fund for credit unions, the National Credit Union Share Insurance Fund.
courtesy of cuna.org
Wachovia customers use their feet, head for CUs
SANTA ANA, Calif. (10/1/08)--Some Wachovia customers are heading to credit unions for their financial needs after the bank's deposits and other assets were sold to Citigroup Monday.
Branna Banks, a Wachovia customer from Santa Anna, Calif., decided to move her money from the national bank that sustained $1.7 billion in losses this year. She opened an account Friday at Bay FCU, Capitola, Calif. (Santa Cruz Sentinel Sept. 30).
In the past two weeks, the $654.2 million asset credit union has opened 1,270 new accounts totaling 14.7 million--a 40% increase, compared with a month when a promotion was not running, Tonee Picard, Bay FCU senior vice president and chief marketing officer, told News Now.
"The lobbies are really full and business is good," Picard said. "We've prepared a lot of user documentation and are answering questions about rates. Education is a key component for the community right now to get them through this. We've also conducted extensive one-on-one training with 230 employees about National Credit Union Administration insurance. We've equipped them with information and handouts."
The $72.2 million asset Santa Cruz (Calif.) Community CU also has seen numerous new members come through its doors in the past few weeks, with some saying they were moving their accounts from other failed financial institutions, Shelia Schat, spokeswoman for the credit union, told the newspaper.
The Wachovia takeover, along with several other recent bank takeovers, have left the country with three so-called superbanks: Citigroup, Bank of America and JPMorgan Chase.
One economist is not that concerned about higher costs and consumer prices caused by the "quasi-monopoly" of recent bank takeovers, including Citigroup's absorption of Wachovia, because there are more than 8,000 banks nationwide, he told the Associated Press (Orlando Sentinel Sept. 30).
Michael Pagano, finance professor at the Villanova University School of Business, also said credit unions are viable alternatives, from big ones "to small mom-and-pops with $10 million in assets."
courtesy of cuna.org
Branna Banks, a Wachovia customer from Santa Anna, Calif., decided to move her money from the national bank that sustained $1.7 billion in losses this year. She opened an account Friday at Bay FCU, Capitola, Calif. (Santa Cruz Sentinel Sept. 30).
In the past two weeks, the $654.2 million asset credit union has opened 1,270 new accounts totaling 14.7 million--a 40% increase, compared with a month when a promotion was not running, Tonee Picard, Bay FCU senior vice president and chief marketing officer, told News Now.
"The lobbies are really full and business is good," Picard said. "We've prepared a lot of user documentation and are answering questions about rates. Education is a key component for the community right now to get them through this. We've also conducted extensive one-on-one training with 230 employees about National Credit Union Administration insurance. We've equipped them with information and handouts."
The $72.2 million asset Santa Cruz (Calif.) Community CU also has seen numerous new members come through its doors in the past few weeks, with some saying they were moving their accounts from other failed financial institutions, Shelia Schat, spokeswoman for the credit union, told the newspaper.
The Wachovia takeover, along with several other recent bank takeovers, have left the country with three so-called superbanks: Citigroup, Bank of America and JPMorgan Chase.
One economist is not that concerned about higher costs and consumer prices caused by the "quasi-monopoly" of recent bank takeovers, including Citigroup's absorption of Wachovia, because there are more than 8,000 banks nationwide, he told the Associated Press (Orlando Sentinel Sept. 30).
Michael Pagano, finance professor at the Villanova University School of Business, also said credit unions are viable alternatives, from big ones "to small mom-and-pops with $10 million in assets."
courtesy of cuna.org
CUNA urges continued insurance parity, and more
WASHINGTON (10/1/08)—As members of the U.S. Congress and the Bush administration continue to work to craft an economic rescue plan palatable enough to be passed by the House and Senate, the White House is considering the possibility of adding a temporary increase in deposit insurance, possibly up to $250,000 or $300,000, into the emergency legislation.
Meanwhile, Credit Union National Association (CUNA) lobbyists learned late Tuesday that the Senate is expected to possibly vote today on a version of the financial rescue package with provisions to increase deposit insurance coverage for banks and credit unions.
The apparent developments came shortly after CUNA urged President George W. Bush and U.S. Treasury Secretary Henry Paulson to make sure to include credit unions in any plans for increased deposit insurance coverage.
Additionally, CUNA asked the White House to consider complimenting the parity in savings insurance for credit unions with a risk-based capital system that will provide credit unions with the flexibility they need to handle the unexpected increasing level of savings flowing into credit unions.
In the letters, CUNA President/CEO Dan Mica pointed out that savings have been flowing into credit unions in the wake of recent closings and sales of financial institutions.
To help credit unions continue to help consumers and absorb the savings inflow, Mica asked the president to consider complimenting the deposit insurance coverage "with a risk-based capital system (which) will provide credit unions and our regulator with additional tools to continue to serve their members safely and soundly."
Mica reminded in the letter that CUNA has been working for the last six years on behalf the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), Title I of which would define a risk-based capital system for credit unions.
"We believe this legislation is more important now than ever, in light of the fact that credit markets are frozen, and consumers and small businesses are reporting great difficulties getting loans," Mica wrote, and added that banks already operate under a similar risk-based capital system.
courtesy of cuna.org
Meanwhile, Credit Union National Association (CUNA) lobbyists learned late Tuesday that the Senate is expected to possibly vote today on a version of the financial rescue package with provisions to increase deposit insurance coverage for banks and credit unions.
The apparent developments came shortly after CUNA urged President George W. Bush and U.S. Treasury Secretary Henry Paulson to make sure to include credit unions in any plans for increased deposit insurance coverage.
Additionally, CUNA asked the White House to consider complimenting the parity in savings insurance for credit unions with a risk-based capital system that will provide credit unions with the flexibility they need to handle the unexpected increasing level of savings flowing into credit unions.
In the letters, CUNA President/CEO Dan Mica pointed out that savings have been flowing into credit unions in the wake of recent closings and sales of financial institutions.
To help credit unions continue to help consumers and absorb the savings inflow, Mica asked the president to consider complimenting the deposit insurance coverage "with a risk-based capital system (which) will provide credit unions and our regulator with additional tools to continue to serve their members safely and soundly."
Mica reminded in the letter that CUNA has been working for the last six years on behalf the Credit Union Regulatory Improvements Act (CURIA, H.R. 1537), Title I of which would define a risk-based capital system for credit unions.
"We believe this legislation is more important now than ever, in light of the fact that credit markets are frozen, and consumers and small businesses are reporting great difficulties getting loans," Mica wrote, and added that banks already operate under a similar risk-based capital system.
courtesy of cuna.org
Monday, September 29, 2008
Money market share accounts at CUs are insured
MADISON, Wis. (9/29/08)--In the wake of recent financial bailouts and questions over the safety of financial instruments, there's been considerable confusion over the difference between money market share accounts at the credit union, and money market mutual funds. The most important difference: One is insured and one isn't.
Money that members place in money market share accounts--which are substantially similar to banks' money market deposit accounts--is backed by the U.S. government through the National Credit Union Share Insurance Fund (NCUSIF). It insures funds up to at least $100,000 for a standard account, or $250,000 if the money is specifically in a retirement account.
A similar level of insurance is available through the Federal Deposit Insurance Corporation (FDIC) for bank deposits.
In contrast, the money in a money market mutual fund does not carry insurance. The recent Treasury Department proposal, however, would temporarily guarantee money market mutual funds for a year to boost investor confidence.
"The Treasury Department's proposal is currently written to guarantee only those funds deposited on or before Sept. 19," warns Steve Rick, senior economist, Credit Union National Association, Madison, Wis.
"Given recent volatility in the market, it makes sense to place any additional savings in an insured money market share account at depository institutions such as a credit union because of the share insurance up to at least $100,000," Rick said.
Other important points to remember about these financial instruments include:
Money market share accounts offer higher yields than traditional savings accounts, but usually have higher minimum balance requirements than share savings accounts, and money market share accounts typically allow limited transactions.
A money market share account is just that--a money market share account at a credit union or a money market deposit account at a bank, whereas a money market mutual fund is a collection of short-term debt investments held by that mutual fund.
Despite the associated risks of uninsured money market mutual funds, they're important savings and investment vehicles for many consumers.
For more information, read "Credit Unions: Safe and Sound" in Home & Family Resource Center.
courtesy of cuna.org
Money that members place in money market share accounts--which are substantially similar to banks' money market deposit accounts--is backed by the U.S. government through the National Credit Union Share Insurance Fund (NCUSIF). It insures funds up to at least $100,000 for a standard account, or $250,000 if the money is specifically in a retirement account.
A similar level of insurance is available through the Federal Deposit Insurance Corporation (FDIC) for bank deposits.
In contrast, the money in a money market mutual fund does not carry insurance. The recent Treasury Department proposal, however, would temporarily guarantee money market mutual funds for a year to boost investor confidence.
"The Treasury Department's proposal is currently written to guarantee only those funds deposited on or before Sept. 19," warns Steve Rick, senior economist, Credit Union National Association, Madison, Wis.
"Given recent volatility in the market, it makes sense to place any additional savings in an insured money market share account at depository institutions such as a credit union because of the share insurance up to at least $100,000," Rick said.
Other important points to remember about these financial instruments include:
Money market share accounts offer higher yields than traditional savings accounts, but usually have higher minimum balance requirements than share savings accounts, and money market share accounts typically allow limited transactions.
A money market share account is just that--a money market share account at a credit union or a money market deposit account at a bank, whereas a money market mutual fund is a collection of short-term debt investments held by that mutual fund.
Despite the associated risks of uninsured money market mutual funds, they're important savings and investment vehicles for many consumers.
For more information, read "Credit Unions: Safe and Sound" in Home & Family Resource Center.
courtesy of cuna.org
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