Thursday, December 10, 2009

Surprising Stat

Do banks or credit unions have a greater percentage of their respective industry’s assets in problem institutions?

If you guessed banks, you’re wrong.

At the end of the third quarter of 2009, the percentage of banking industry assets in problem banks was 2.61 percent.

In comparison, 4.83 percent of the credit union industry’s assets are in problem credit unions.


  1. Data is from FDIC and NCUA. Assets at troubled banks can be found in FDIC's Quarterly Banking Profile. Assets at problem credit unions can be found in the monthly NCUSIF presentation to the NCUA Board.

  2. It's unfortunate there aren't any statistics showing how much of the banking industry's assets would be in problem banks if it wasn't for TARP funds. Do you have any statistics showing how many banks are not on the problem list because of taxpayer assistance?

  3. Dear Anonymous:

    I don't know the answer to your question. However, the Capital Purchase Program (CPP) will turn a profit for taxpayers. Treasury announced that the expected profits from the CPP will be $19 billion.

    I guess the same question could be asked about the Temporary Corporate Credit Union Stabilization Fund. If this fund had not been created by Congress in May, how many more credit unions would have been on the problem list.

  4. Interesting you would mention the $19 billion in expected profits. If I'm not mistaken, the majority of that $19 billion will come from the sale of the CPP warrants issued to the U.S. Treasury when it purchased the preferred stock in the banks requesting taxpayer assistance through this program. I'm curious, didn't the organization you represent, the American Bankers Association, lobby congress to cancel these taxpayer owned warrants? From what I understand, the American Bankers Association also sent the Treasury a letter asking that banks be given the ability to withdraw from the CPP program without having to pay what they consider to be "an onerous exit fee." Am I the only one who finds it hypocritical that you would boast of these expected profits, while the organization you represent did everything in its power to prevent these same profits from happening?

  5. Interesting stat. What dollar amount do those percentages represent?

  6. anonymous above. you're focused on the wrong villain and you're making an argument that misses the point. if a cu was a bank it could get tarp. tarp is protecting the bank insurance fund. in cu's, there is NO protection and the losses as a % of the insurance fund are and will be greater... and that means natural person cu's will LOSE while healthy banks are protected.
    lets say that no bank gets any TARP---tell me how that HELPS the cu's interconnected risk?
    does the fact that some of the large banks loaded up on bad assets remove the fact that north island, eastern financial, gte, arrowhead, arizona federal, suncoast (and others) didnt?
    without the $30B borrowing line from US Treasury in January, according to Chairman Matz, "the entire cu movement would have imploded" (this was said at all 3 town halls and at a recent cu conference).
    vitriol against banks wont fix the HUGE credit problem in ccu portfolios nor the HUGE problem in cu loan portfolios.

  7. The reason why I adjusted for asset size and looked at assets in problem institutions as a percent of the industry's assets deals with the fact that the banking industry is about 15 times larger than the credit union industry. This corrects for the scaling issue.

    But to answer your question: For FDIC-insured institutions, the aggregate assets in problem banks is $346 billion. For NCUSIF-insured credit unions, the assets in problem credit unions is $42.2 billion.



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