WASHINGTON – The Federal Reserve announced a massive infusion of funds into the banking system yesterday, as the financial markets crashed again, sending the Dow Industrials down a record 800 points, before rebounding some to close down 370 points.
Credit unions around the country were working to calm depositor fears, promoting a more than doubling in federal deposit insurance coverage under the new bailout bill and advertising the safety of the nation’s credit unions. The Michigan, Pennsylvania and Maryland/DC leagues all introduced new radio campaigns touting that credit unions are trusted financial institutions in this time of turmoil.
"Credit unions have told us they continue to get calls from members worried about their money," said David Adams, president of the Michigan league, of plans for a $700,000 ad buy. "This radio campaign will speak to the soundness and security of credit unions, but also how they are trusted lenders in their communities."
The Maryland/DC CU Association took out thirty second ads and traffic sponsorships promoting credit union safety that will be broadcast on top-rated radio stations in the Baltimore, DC, and western Maryland media markets. Bus tail ads will be in placed in Baltimore and DC and run October 15 through November 14.
The enhanced efforts came as the world markets were crashed again yesterday, amid news of growing banking failures overseas and a new plan for massive intervention by the Federal Reserve.
The Fed announced several steps it said would pump a staggering $600 billion into the nation’s banks, including paying interest to banks and credit unions on so-called sterile reserves and increasing its loan program to troubled banks.
Meantime, NCUA said yesterday it shuttered another failed credit union, the third one closed in the past week and 13th so far this year. The federal regulator said N&W Poca Division FCU, a $7 million credit union in Bluefield, W.V., was insolvent and has no chance of returning to viable operations.
That followed last week’s liquidation of Kaiperm FCU, a one-time $125 million Oakland, Calif., credit union, and Tex-Dot Wichita Falls CU, in Texas.
Regulators are expecting mounting credit union losses as credit unions submit their Call Reports for the just completed third quarter, as well.
The financial markets opened yesterday with a huge fall, apparently rejecting the notion that last week’s passage by Congress of a huge bailout of the mortgage industry would calm the storm. The Dow Jones Average plunged more than 800 points to fall below 10,000 for the first time since 2004, before closing down 370 points.
The average is down almost 30 percent from its all-time high of 14,164, set a year ago.
Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits. U.S. investors appeared worried the bailout would not be enough to jump-start the economy. Even the Fed’s plans for a massive new intervention didn't help much.
