Primary Financial's strategy to cut SimpliCD rates 20 basis points across the board only lasted one week, and didn't contribute to the CUSO's record 2008 revenue, said President/CEO Mark Solomon.
The September 2008 rate cut was meant to drive deposits back to corporates, which needed deposits at the time due to seasonal liquidity outflows, the failure of Lehman Bros., and other market pressures. The strategy worked, resulting in an outflow of funds from Primary Financial, which Solomon said actually decreased income.
"It wasn't just corporate credit unions, the whole financial industry was concerned about liquidity," Solomon said. "This was just one small part of the many things going on at the time to protect credit unions and ensure the corporate network remained liquid."
Recommended For You
Solomon said he doesn't think SimpliCD competes inappropriately with corporate deposit products, saying corporates are indifferent to the products they sell, whether it's SimpliCD, a corporate certificate or a marketable security, because the products exist only to benefit member credit unions.
"It's even not like a credit union's only option is a corporate," he said. "There are thousands of providers out there, and by remarketing our products, corporates are simply offering credit unions one-stop shopping."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
