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How safe are credit unions?
If the banks are in such trouble what about credit unions? If one did get into financial problems what safeguards are there?
asked in credit crunch, finance

robinsamuels answers:

The banks have got into difficulty for two main reasons.

They have been buying and selling each others debts. Credit unions are only allowed to lend money received from savers, they are not allowed to raise money on the wholesale money markets.

They have had their share values savaged, as investors lose confidence. The greater the loss, the greater the loss of confidence. It's a vicious circle. Credit unions do not have share holders.

The only way in which they will be at risk is from loan defaults, if the credit crunch triggers a recession which forces people out of work.

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OneFootInTheGame answers:

In the US credit union accounts are insured by NCUA (National Credit Union Administration). That's up to $100,000. There is private insurance provided by ESI (Excess Share Insurance Corporation, Inc.) which covers amounts over this, but I don't know the details. Not much help to the credit union itself, but your money is relatively safe.

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