NEW YORK - Perhaps no group of financial institutions could be more opposite from the big, for-profit, investment banks than the National Federation of Community Development Credit Unions, so CU Journal asked Federation Executive Director Cliff Rosenthal for his thoughts on how the financial upheaval will affect his member credit unions.
CU Journal: What do you think of the bail-out?
Rosenthal: Like many others, we are not thrilled with the bill, but the alternative-doing nothing-threatened disaster. It does not, in our view, provide any sort of adequate assurance that benefits will flow either to small businesses or low- and moderate-income consumers in terms of eased access to credit, or greater ability to avoid foreclosure.
CUJ: How do you think this will affect community development credit unions?
Rosenthal: To the degree that it helps enhance the safety of the entire credit union system, it is certainly a good thing. Our CDCUs had essentially no direct exposure to the kind of destructive subprime loans that have fueled this crisis; however, they-like many other credit unions-are feeling the effect: in some cases, a "ripple," in others a large wave.
As construction jobs dry up in some parts of the country, for example, CDCU borrowers can't make payments on their vehicles any more.
We don't see any obvious direct benefits to CDCUs from the mortgage aspects of the bill, although we hope that a general improvement in the economy will help. We do believe that increasing the deposit insurance limit to $250,000 temporarily will generally help boost consumer confidence in credit unions; there are instances, too, where institutional non-member deposits will be more likely to remain in CDCUs than they would otherwise be.
CUJ: How do you think it will affect members of these credit unions?
Rosenthal: The direct effects may not be enormous; hopefully, general improvements in the economy will help them, especially if they are able to retain their jobs.(c) 2008 Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
