Subprime Contagion Spares CUs

ALEXANDRIA, Va. – Credit unions have apparently avoided the crisis spreading through the subprime mortgage market, according to NCUA. David Marquis, chief examiner at the credit union regulator, said yesterday credit unions have little exposure to subprime mortgages, even as more credit unions have expanded into the market in recent years. “It should be a very rare event,” said Marquis, the director of NCUA’s Office of Examinations and Insurance, of credit union losses caused by subprime lending. Reports from field examiners and the regions bare this out, he added. In addition, credit union exposure on the investment side—in mortgage backed securities—should also be limited because most MBSs held by credit unions “tends to be A and B paper,” said the credit union regulator. Marquis’ remarks came as growing numbers of subprime mortgage companies and banks are reporting spikes in delinquencies and charge-offs and related liquidity troubles.