The National Credit Union Administration has packaged $50 billion of distressed securities for sale as $35 billion in government guaranteed bonds in order to bail-out the non-profit sector of the banking industry. Bloomberg reports, “Credit unions in the U.S. may absorb as much as $9.2 billion in losses over the next decade as the industry strives to recover from sour investments in real estate and consumer loans, U.S. regulators said today.”
“Regulators announced a rescue of the nation’s so-called wholesale credit unions,” the Wall Street Journal reports, “which don’t deal with the general public but provide behind-the-scenes services to thousands of other credit unions across the U.S. The vast majority of those retail credit unions are financially sound, but they are exposed to the losses through the industry’s insurance fund.”
One of the great urban myths of the current financial meltdown is that Credit Unions are in healthier shape than banks. Nothing could be further from the truth.
