U.S. Central Federal Credit Union issued medium-term notes because it's having a liquidity problem, said Charlie Felker, managing director of regulatory affairs for First Empire Securities.
Liquidity had to be at least part of the reason, he said, asking, "Why does any credit union access a liquidity source outside of normal operations?"
Regardless of the NCUA's share guarantee, Felker said he's observed withdrawal pressure within the corporate system because the wholesale credit unions are paying submarket rates on deposits, and many natural person credit unions "aren't willing to take another one for the team."
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"I wouldn't call it a run on deposits, but I would say deposits are doing a fast walk out of the corporate system," Felker said.
Four billion dollars is a "good chunk of change" compared to the $27 billion U.S. Central's total assets, he added.
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