Credit union bailout? Not so fast.

Two recent articles – one at the Washington Post and another at the Wall Street Journal – leave the impression that credit unions are receiving a bailout from the government, like banks and insurance companies.

But things aren’t always as they seem, and credit unions are not receiving a bailout. In fact, credit unions are doing much better than banks.

The two stories focus on an institution that services credit unions, U.S. Central Corporate Federal Credit Union, an institution that handles financing and transactions for a big group of credit unions. U.S. Central doesn’t service members, like you or your neighbor. It services other credit unions. Think of it as a credit union for credit unions.

But the way the Wall Street Journal and the Washington Post make it sound (with headlines like “U.S. Aid Goes to Credit Unions”), the entire CU industry is in need of a handout. And that’s just not true.

What happened was U.S. Central took a group of credit unions’ money and invested it those mortgage-backed securities we keep hearing about. When those investments went sour, U.S. Central asked for a $1 billion loan (not bailout) from the National Credit Union Administration (NCUA) – the same government agency that insures your deposits at American 1. This isn’t Congress handing money to a financial institution that made bad decisions – as has happened a lot since September. Instead, it’s credit unions stepping in and helping out one of their own institutions.

Does this affect you or your membership at American 1? Not at all. American 1 is doing well financially. In fact, we trust our deposits with the Federal Reserve because of its reliability.

While newspapers seek to build up interest in stories by writing provacative headlines, the WSJ and Post went a bit too far with their misleading headlines.


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