AUSTIN, Texas-Consumers have become increasingly spooked about the health of their financial institutions, and Amplify Federal Credit Union recently had a scare of its own as a number of depositors withdrew large amounts of cash, some on the order of tens of thousands of dollars. This despite the fact Amplify's solvency was never in question; instead, said SVP-retail Pierre Cardenas, many members did not understand the CU's federal deposit insurance and made erratic moves with their money.
"Anyone who had more than $100,000 was spreading it out among a bunch of credit unions and banks," he said.
Many members were under the impression that their deposits, now insured up to $250,000 thanks to language in the $700-billion federal bailout, were only insured up to $100,000 per financial institution, not per account. As a result, they sent their money every which way, thinking that would better protect their cash.
Amplify tackled this trick head-on by taking out a full page ad in a local newspaper, and writing an open letter to the community explaining deposit insurance. Given the ongoing tightness in the credit market, the $472-million credit union now plans to take out another ad to tell the entire city of Austin it has plenty of money to lend and is available to help the community.
