November 1, 2010
News began to emerge Friday that regulators were in Spokane to close $11 million The Union Credit Union, which slipped below an allowable net worth---another Main Street Casualty of Wall Street greed.
Of course, it wasn’t a secret that The Union Credit Union was in the hands of the regulators. And last Friday was the 120th day of a 120-day warning by regulators to either merge or close the credit union.
Says Washington State’s Chief Regulator, Scott Jarvis, to Spokane’s KXLY, “The failure of The Union- the first credit union closed in Washington State- is a clear example of the consequences these unusually difficult times bring to our financial institutions and their members."
In Spokane County, the “unusually difficult times” that Jarvis is referring to is in part reference to the 8.7% unemployment rate (down from 11.2% in February), as well as its economic reliance on construction, agriculture and natural resources-based industries. Because The Union Credit Union was focused on serving union members who labor in these industries, the credit union suffered along with its members.
“The entire country has had a challenge recovering from the problems of 2008 and 2009. The economy has been tough for consumers and a few small financial institutions, including community banks and credit unions,” said Washington Credit Union League President & CEO John Annaloro. “Between the corporate write-downs, high unemployment among members, and limited access to capital, this credit union’s predicament was more a result of a perfect storm of uncontrollable outside influencers than anything else.”
According to news reports, Alaska USA Federal Credit Union of Anchorage, Alaska, took over The Union Credit Union’s loans and assets, while Numerica Credit Union, of Spokane Valley, assumed all deposits and membership, under agreements signed with the National Credit Union Administration (NCUA).
As usual, depositors need not worry, as saving accounts in a credit union are insured by the National Credit Union Share Insurance Fund (NCUSIF), which, like the FDIC for banks, is backed by the full faith and credit of the United States Government.