CUNA: CU Conservatorships Rare Compared to Bank Failures
Bankers may have a few holes in their anti-credit union business lending case if they’re looking at Texans Credit Union’s recent conservatorship.
CUNA has continued to support expanding credit union business lending efforts, including backing reintroduced legislation from Sen. Mark Udall (D-Colo.) to increase the member business lending cap to 27.5%.
Still, will banking groups that have lobbied hard to stop those measures look to the commercial and business loan losses experienced at the $1.6 billion Texans CU and its conservatorship as proof that credit unions may be in over their heads? CUNA isn’t worried.
“Surely the bankers will attempt to exploit this development, as a reason for rejecting our efforts to expand business lending authority,” said Pat Keefe, CUNA vice president of communications. “But there are two things working against their arguments: Their own problems with failing banks are much more severe, and credit unions have an overall better record of business lending.”
Keefe said on April 15, the same day that NCUA announced Texans’ conservatorship, the FDIC announced the closing of another six banks with total assets of about $4.5 billion. The estimated loss for these six banks is $520 million, according to FDIC. This brings total banks failures for the year to 34, with total assets of about $14 billion, as of April 15. Two of the six from April 15 are in the top five for the year in terms of asset size, he added.
By comparison, as of April 18, there were seven total CU failures, including conservatorships and liquidations, Keefe pointed out, adding the NCUA does not provide estimated losses as FDIC does.
For all of 2010, credit union MBL net charge offs were 0.66%, Keefe said. That’s “a shade over” a third of the comparable bank number of 1.75% for 2010.
“Texans is a rare exception to the typical result at credit unions,” Keefe offered.