Bank Failure Friday strikes credit unions

This time it was three banks and two credit unions. I guess they were making up for a couple quite weeks. I find it disturbing that the credit union system is getting unstable with almost no reporting.

The pace of the ongoing credit crisis quickened significantly Friday when regulators seized three banks and placed two large corporate credit unions into conservatorship, citing a need to "stabilize the corporate credit union system."

Banks in Colorado, Georgia and Kansas were closed by regulators, bringing the number of bank failures this year to 20, while the National Credit Union Administration Board seized corporate credit unions in California and Kansas that have a combined $57 billion in assets. Corporate credit unions are chartered to act as a sort of clearinghouse for the credit unions that serve consumers.

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these are wholesale credit unions correct?

$57 billion ain't chump change either.

I thought the credit unions stayed away from all of the Ponzi scheme stuff so anyone have any details as to why these are failing?

Simply people are broke, lost their jobs, can't make the mortgage and pay their bills? Or did they get sucked into some derivative structured finance "product" to "protect" their assets somewhere?

That would be about the size of it ...

... it seems as if consumer credit unions sell some of their mortgages, car loans, etc. to a corporate credit union to increase their lending capacity, like banks selling mortgages to Fannie Mae (and the corporate credit union may have raised some of that money by setting up a Collateralized Debt Obligations). Corporate credit unions might also be lending to consumer credit unions who have a use for funds.

Bad economic conditions will make some of the assets held by the corporate credit union to go bust. And if credit unions are forced to cut back on their lending, the corporate credit unions would face dwindling interest income from lending to consumer credit unions just when the returns on their asset base would be dropping because of loans going sour.

This is truly bad news

While Discover, Citigroup, JP Morgan Chase literally are raising interest rates on credit cards to 30%, even with good credit, no late payment....

i.e. still just going along with their loan sharking ways...

the credit unions are the ones offering quality consumer loans and banking...

and....odds are they are not offshore outsourcing your data as much.

I had one account, which I closed and even though I closed it....they friggin' sent my account data to India.

Thanks for the intel.