National Association of Federal Credit Unions (www.nafcu.org) President Fred Becker issued the following statement in response to an article that appeared in The Wall Street Journal yesterday, "Mortgage Market Trouble Reaches Big Credit Unions."
"Yesterday's story in The Wall Street Journal fails to make the distinction between corporate credit unions, which serve other credit unions, and natural person credit unions, which serve individuals. In addition, in several instances, the term "˜big' is arbitrarily substituted for "˜corporate' in the article."
"It is important for the public to understand that corporate credit unions' investments are limited to the most highly rated securities. Also, natural person credit unions, otherwise referred to as regular credit unions in the article, are demonstrating solid fundamentals, especially by contrast with other federally insured institutions, like banks."
Additionally, Becker noted that:
- The overall loan delinquency ratio for federally insured, natural-person credit unions is much lower than for other federally insured institutions: 0.91 percent in March 2008 compared with 1.71 percent for FDIC-insured institutions.
- The charge-off ratio for first mortgages held by federally insured credit unions was 0.06 percent in March vs. 0.76 percent for FDIC-insured institutions.
"Overall," Becker noted, "as stated in yesterday's article, "˜credit unions "¦ are among the most conservatively run financial institutions in the U.S.' and, because of their traditional practices, credit unions are managing well in this economic climate. The recent development for corporate credit unions, as also noted in the feature, is just another indication that, "˜almost no financial sector is immune' from the current economy."
Most importantly, Becker noted, "unlike other financial depository institutions, credit unions under the supervision of the National Credit Union Administration (NCUA), which is responsible for overseeing the National Credit Union Share Insurance Fund (NCUSIF), have never cost the taxpayer one dime."
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public. For more information, visit www.nafcu.org.