European Crisis Could Undercut CUs’ Net Worth, Loan Demand
Problems in Greece, Spain and other Euro zone countries could show up on credit union balance sheets, according to industry economists.
News from Europe has caused volatility in the stock market, said NAFCU President/CEO Fred Becker, which could spur a flight to safety by nervous investors who pull money from the stock market and place it in federally insured deposit accounts. Credit unions, already dealing with excess liquidity, could face even more pressure maintaining well-capitalized net worth ratios.
Catalyst Corporate Federal Credit Union Chief Strategist Brian Turner agreed a flight to quality “implies a potential loss of principal” and added that investors “may not like the yield, but at least principal is protected.”
However, Turner said he thinks Europe will have less of an impact on the U.S. economy that his peers; instead unemployment will be a far greater influence on credit union balance sheets.