December 10, 2008
Credit unions offered a liquidity program
The National Credit Union Administration said it would pump money into U.S. credit unions to offset an imbalance caused by aid given to commercial banks.
As the federal government has guaranteed debt issued by commercial banks, credit unions -- a conservative niche in the financial sector -- are finding it hard to compete for investment dollars, The Washington Post reported Wednesday.
We need to have a level playing field to every other financial institution, Brad Miller, executive director of the Association of Corporate Credit Unions, told the Post.
The NCUA said it would offer credit unions $2.5 billion in low-interest loans, although it could increase the liquidity program to $41.5 billion, the Post said.
Credit unions have largely escaped the financial turmoil rocking commercial banks. These 8,400 U.S. banks serve customers who invest in their own communities and borrow from the nation's 28 corporate credit unions when short of money.
Lending at credit unions grew 6.3 percent in 2008 through September and their finances are in excellent shape, the Post reported.
But, corporate credit unions have suffered $14 billion in losses on mortgage-backed securities, which they are loath to sell, believing their value will recover over time, the Post said.