Thursday, April 14, 2011

Credit Union Borrowings from Fed's Discount Window During 2008

As financial markets became frozen in 2008, two doomed corporate credit unions -- U.S. Central and Western Corporate -- increased their use of the Federal Reserve's discount window to meet their liquidity needs, according to recently released data.

U.S. Central borrowed in aggregate almost $172 billion from the Federal Reserve and Western Corporate borrowed in aggregate approximately $51.6 billion.

In addition, Eastern Financial Florida CU, which was seized by the NCUA in April of 2009, borrowed almost $555 million between October 24 and December 11.

Other credit unions that made regular use of the discount window include Alaska USA FCU ($17.3 billion in borrowings between February 13 and end of 2008), America First FCU ($990 million in total borrowings between October 17 and December 24), and Scott CU ($591 million in borrowings between February 22 and the end of 2008).

To see what credit unions borrowed from the Federal Reserve during 2008, click on this link.

There are two tabs on the excel spreadsheet. The first tab provides you with the date and amount borrowed by a credit union during 2008. The second tab on the excel spreadsheet gives the aggregate amount of borrowings by credit unions during 2008.

The next project will be to look at credit union borrowings from the Federal Reserve in 2009 and 2010, as problems in the corporate credit union system intensified.


  1. I am not sure why the good professor considers this information useful. The discount window has been increasingly important as a source of liquidity for financial institutions of all types. As the credit union world reshapes itself and more of us become account holders at the Fed, you should be prepared to see a more credit unions use the discount window as they occassionally experience missmatches in their investments/liquidity portfolios. All borrowing at the discount window is well securitized and no taxpayer money is at risk.

  2. Well said. I hope he doesn't bring the "tax exempt" issue into this discussion. Then I would hope he would explain how CUs that are members of the FHLBs are helping to pay back the money used in the 1990s-era bailout of the for-profit banking system even though credit union did not receive ANY federal assistance for deposit insurance.

  3. $172 billion sure sounds a lot more dramatic than overnight borrowings of $1 to $6 billion over a period of around 3 months. I have a jar of change on my desk with about 30 bucks in it. Using Dr. Leggett's math, I had over $10k on my desk last year!

  4. CUs that are members of the FHLB system are members of their own free will - they don't have to become members in order to become a credit union. Therefore, they should know and understand the cost of membership, and make an informed decision about the costs and benefits of said membership. If the access to the system (and resulting liquidity and/or mortgage purchasers) is worth the cost, then CUs become members.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.