Linda Jekel, director of credit unions for the state of Washington’s Department of Financial Institutions, does not foresee any supervisory issues arising from Bank Transfer Day.
“Washington credit unions are well capitalized,” she said, “and are able to manage” any deposit surge impacting net worth ratios that might surface from large amounts of funds funneled from banks into credit unions as a result of this Saturday’s anti-bank event.
Washington credit unions, she said, appear well prepared “to lend them out or put them into investments” to secure profits.
As for net worth ratios, there is one exception, a credit union she did not identify that she said is below par and could not handle the deposit influx “but is one not likely to be receiving” a major inflow of funds, she said.
Overall, Jekel said, it’s “hard to know what kind of reaction consumers might have” to Bank Transfer Day and that the amount of switching may simply depend “on consumer sentiment, but one thing I can say is that public does benefit from this kind of competition.”
She said she has seen NCUA’s guidance suggestions on Bank Transfer Day issued last week and her agency has also received similar advice from the National Association of State Credit Union Supervisors.
Separately, Jekel’s comments came as her agency cleared a request submitted by the Northwest Credit Union Association for an unnamed CU to provide life insurance to its directors.
Based on a legal interpretation, credit union employees as well as volunteers are eligible for the insurance coverage, she said.
“Therefore, we do not object to a state chartered credit union purchasing life insurance for its board members or committee members,” wrote Jekel.
Officials of the NWCUA were not immediately available to comment on how many other CUs might also be requesting coverage or the identity of the requesting credit union.
In the state opinion, Jekel held that conditions to buy life insurance for directors must be “reasonable in coverage and amount” and that it be the same as offered to employees.