A confidential memo from Primary Financial President/CEO Mark Solomon to corporate credit union CEOs reveals the investment CUSO coordinated a system-wide 20-basis-point rate cut on SimpliCDs.
The Sept. 19, 2008 memo, obtained by Credit Union Times, said the "less aggressive" CD rates were intended to funnel liquidity "out of issuing banks and back onto corporate balance sheets."
As of Monday, Sept. 22, 2008, Primary Financial reduced rates "by 20 basis points across the board." The rate reduction was issued "until market conditions warrant further adjustment" and applies or applied only to bank-issued CDs, not those issued by credit unions.
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"For corporates that raise rates on their investment offerings to match our lowered rates, we hope that your on-balance sheet investment rates will become more competitive and in line with some rates being paid outside of the network-thus attracting more deposits to corporate balance sheets," Solomon wrote in the memo.
According to Primary Financial's 2008 annual report, more than 40% of all credit unions conducted business with the CUSO last year. It placed more than $8.8 billion in certificates and recorded a record net income of $3.9 million last year.
Solomon did not immediately reply to requests for comment.
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