In describing the difference between banks and credit unions, Public Service Credit Union on its website wrote "[i]n the entire history of U.S. credit unions, taxpayer funds have never been used to bail out a credit union."
However, is this statement correct?
The evidence would suggest that credit unions have received significant assistance from the U.S. Treasury and thus the American taxpayer in recent years, although credit unions are exempt from paying corporate income taxes.
According to the National Credit Union Administration, the Central Liquidity Facility borrowed more than $18 billion from the U.S. Treasury in 2009 to stabilize two failed corporate credit unions -- U.S. Central and Western Corporate Federal Credit Unions.
In addition, the Temporary Corporate Credit Union Stabilization Fund has borrowed more than $11 billion from the U.S. Treasury to handle the resolution cost of failed corporate credit unions. Over $5 billion of the borrowings from the U.S. Treasury is still outstanding.
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Leggett, you're a typical Washington insider who plays word games. Taxpayer funds have never been LOST to bail out a credit union is true. The borrowed funds will be repaid with interest thanks to natural-person credit unions. Also, the next time you bash us, try using a legitimate source instead of a credit union's website marketing piece.
ReplyDeleteOk, it pains me, but I have to agree with Leggett. Without the loans from the government, our credit union industry would have gone under, several times. So while we intend to pay our current $5.1 billion in loans back (which is 85% of our borrowing capacity by the way), in the meanwhile, as distasteful as it is, we are being bailed out. PCCU's website statement should be corrected (or clarified). Actually, now that I think about it more, it’s disturbing to me that you say their website’s marketing piece isn’t a legitimate source. It is covered under truth in advertising, is it not?
DeleteA bailout consists of a direct payment from the taxpayers to the industry. Such as the $150 billion to banks/S&Ls in the early 1990s.
ReplyDeleteIf this borrowing is a bailout, then the banks got a $500 BILLION bailout this time around.
And this does not include special bailouts for individual banks like Citibank.
No one said banks had not been bailed out.
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ReplyDeleteDavid, your members are paying for the bailout of the CCU mess not contra costa credit union.
Your members enjoy an eye popping 35 bps on their deposited dollars. Most banks pay more than that.
Guess you've been too busy to notice, with all those loans you're writing. That whopping 27% loan to share must have you up all night!
Thanks for clarifying that a credit union web site is not legitimate.
Tell you what,, how's about you craft a letter to your members and explain to them why they are bailing out the CCU.
Your saving grace is the same as the rest, your members don't know THEYRE paying.
Im glad my members don't know, but we still pay a good rate.
Big banks messed up, get bailed out...banks pay taxes.
ReplyDeleteBig banks pay back tarp, us treasury makes profit.
Big credit unions messed up, get bailed out by cu members and CUs...credit unions don't pay taxes.
Maybe Hampel of Cuna (cu not accountable) can do another fantasia white paper and explain it to us!