A Statement on New York's Credit Unions from William J. Mellin, President/CEO of the Credit Union Assoc of NY

ALBANY, NY (03/23/2009)(readMedia)-- Two wholesale credit unions (U.S. Central Federal Credit Union, Lenexa, KS and WesCorp Federal Credit Union, San Dimas, CA) were taken over by the National Credit Union Administration (NCUA) on Friday. It's important to note that these two credit unions are not the same institutions that credit union members patronize. They are wholesale organizations that serve everyday credit unions. In other terms, they are the equivalent of a banks' bank. It's also important to note that while these two wholesale credit unions were placed into conservatorship, they are still fully operational.

How will this impact credit union members in New York? In short, there will be no impact to members. It will be business as usual at your local credit union. Member deposits will remain as safe and secure as they were before, insured to at least $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), and you will still receive the same quality service credit unions are known for.

New York credit unions remain well-capitalized, more so than most banks, making them well-positioned to absorb the costs of this action. As an industry, our average capital-to-assets ratio is more than 10%, which is considerably higher than the 7% industry standard for being "well capitalized." It's also higher than the banking industry's average of about 9%.

In 2008, New York credit union's assets grew by 8.5%. Their loan portfolios grew by 7.6%, a stark contrast to the loan portfolios of all U.S. banks, which posted a 0.4% decline during the same time period.

Wholesale credit unions, by nature of what they do, operate in the capital markets and hold highly rated, invest grade securities. Like many others in those markets, they have seen the value of their investments decline in the current economic downturn, resulting in some actual losses. The losses these two "corporate" credit unions posted were significant enough that the government (NCUA) decided to step in.

The fact to remember is that overall the credit union sector is solid and healthy. Michael Fryzel, the industry's federal regulator, said as much on Friday. When addressing the "corporate" situation he stated that, "Credit unions that serve consumers remain very strong."

Congressman Barney Frank, the chairman of the House Financial Services Committee, recently echoed that sentiment saying that "If credit unions made all of the mortgage loans, then there would have been no subprime crisis, and therefore no economic crisis."

The Credit Union Association of New York has served as the trade association for the state's credit unions for 92 years. It is the fifth largest association in the country. New York credit unions have assets of more than $43 billion and 4.2 million members. To learn more about the Association, visit www.cuany.org.

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