CUs Urged To Actively Manage Savings Rates
WASHINGTON–Credit unions are being urged to manage their savings rates actively in the wake of another cut in short-term rates last week by the Federal Reserve–this time a cut of 50 basis points.
Brian Turner, manager of advisory services for Southwest Corporate FCU’s investment services, called on credit unions to make certain all deposit rates are positioned to respond to the Fed’s action.
“Given that many credit unions did not raise share draft or regular share rates very much over the past few years, there might be a propensity to believe that there’s little room to move down–please check anyway,” said Turner in a commentary sent to Southwest Corporate member CUs. “In that money market rates have risen significantly over the past year and in many cases are higher than 3%, all tiered rates need to be reviewed.”
Average rates paid by credit unions remain mired near all-time lows, at just 0.89% for regular shares and 0.61% for checking, according to DataTrac. But credit unions continue to pay much higher rates than banks on CDs; an average of 75 basis points higher for CDs from three-months going out to five years in maturity.
The Fed’s action last week, reducing the target rate for overnight funds to 3%, follows the unusually large cut earlier of 75 bps. It was the fifth time the short-term rate has been cut since September.
Bill Hampel, chief economist for CUNA, said last week’s action could signal more cuts to come. “The fact that they went 50 (BPs) instead of 25 suggests either they wanted to meet the financial market’s expectations, or they already know that (Feb. 1) job numbers will be disappointing, furthering evidence suggesting the economy is slipping into a recession,” said Hampel. “If it is, Fed Funds will get to 2% fairly soon.”
Employees Thwart Robber
GRAND RAPIDS, Mich.–Employees at West Michigan CU foiled an attempted robbery last week after they recognized a man entering the building as the one who robbed them three weeks ago–so they locked the door before he could get in. When police arrived, the suspect tried to drive away, but he was stopped and arrested. The suspect later confessed to the Jan. 9 holdup at the same credit union branch, and admitted he was planning to rob the credit union again.
Long-Time Staff Charged In Theft
CHICAGO–A long-time employee at Synergy Partners CU was charged with stealing $37,400 from member accounts to pay her own bills. Antoinette Myszkowski, 50, who worked for the credit union for 20 years, was charged with 24 felony counts of forgery. The scheme was uncovered in August 2007 when Myszkowski paid off her personal Visa bill of $3,000 by withdrawing funds from another member’s account. The credit union conducted an internal audit afterwards and discovered the rest of the missing funds.
Steelworkers CU Expands FOM
STEUBENVILLE, Ohio–Wheeling-Pittsburgh Community FCU, formed to serve steelworkers, has converted charters to serve surrounding Jefferson County. The $30-million CU was founded to serve the United Steelworkers Local 1190. It is also shutting its downtown offices and moved all of its operations. Plans include a name change.
