As STCU members may have learned through media reports, the federal government on Friday placed two large wholesale credit unions under conservatorship.
At the same time, federal authorities stressed that consumer credit unions remain strong and healthy.
Indeed, STCU is on pace for another year of record growth, averaging more than 1,000 new members a month so far in 2009. We have reserves that are well above the 7 percent considered healthy, and continue issuing loans to qualified borrowers.
"If credit unions made all of the mortgage loans, then there would have been no subprime crisis, and therefore no economic crisis," said Congressman Barney Frank, chairman of the House Financial Services Committee, who has been highly critical of practices that landed some other financial institutions in trouble.
The corporate credit unions at issue - Kansas-based U.S. Central Federal Credit Union, and California-based WesCorp Federal Credit Union - are among 28 wholesale credit unions nationwide that are used by consumer credit unions for their daily liquidity needs.
The corporate credit unions operate in capital markets and hold highly rated investment-grade securities. Like many other institutions in those markets, they have seen the value of their investments decline.
The losses suffered by U.S. Central and WesCorp are significant enough that the National Credit Union Administration stepped in, to assure that they continue operating normally.
One hundred percent of the funds that consumer credit unions have deposited in those two institutions remain federally insured and backed by the full faith and credit of the U.S. government.
Likewise, your deposits at STCU and other consumer credit unions remain federally insured up to $250,000 by the National Credit Union Share Insurance Fund.
No member of STCU or any other credit union has ever lost a dime of federally insured money.
U.S. credit unions have been serving members for 100 years, through good times and bad. STCU was founded in 1934, during far worse economic times than the nation is now experiencing. We are well positioned to remain strong.
But you don't have to take our word it. Instead, consider what the Wall Street Journal recently reported:
Credit unions have largely avoided the banking world's turmoil by sticking to their plain-vanilla business model: taking in deposits from owner-members and lending the money back out to them. And they're writing more loan checks than they have in years - still mainly for home and auto loans, but for more business loans, too.
