The Soundness Of Credit Unions

The news of Silicon Valley Bank's and Signature Bank's bankruptcy earlier this year was confusing for many. It's understandable for members to seek answers for how this could happen, and if their local credit union is at all vulnerable.

It’s important to note that both Silicon Valley Bank and Signature Bank are for-profit banks with vastly different priorities than those of not-for-profit institutions like credit unions. They also largely served clients in the startup and technology space, which have faced challenges over the past year.

Credit unions in Massachusetts have key differences that make them well positioned to protect the interests of their members. We talked to Workers Credit Union Senior Vice President of Treasury Investments and Asset Liability Management, Bob Leger, about the soundness of credit unions. He offered the most important things members should know.

• All deposits at Workers Credit Union are insured. There are not one but two institutions in place keeping WCU deposits safe. The National Credit Union Association (NCUA) insures deposits up to $250,000 or $500,000 depending on the account structure through the National Credit Union Share Insurance Fund (NCUSIF). That is where the Massachusetts Credit Union Share Insurance Corporation (MCIS) kicks in and it has no limit. That institution was created by the Massachusetts legislature in 1961 so Bay State residents don’t have to worry about deposits above the NCUA limit. Without it, it would be the credit union’s decision whether they want to purchase insurance beyond the NCUA limit.
• Being a not-for-profit shapes credit union strategy. As a not-for-profit institution, WCU decisions are not solely driven by profits, but by the ability to help and support our local communities and to change the financial lives of our members for the better. This allows WCU to offer lower-cost loans and higher rates on deposits.
• There are regular evaluations. All credit unions, including Workers Credit Union submit quarterly reports to NCUA and are examined regularly to make sure their business practices are safe and sound and the institution is stable for deposits. Should there be any issues, recommendations are made to handle the situation.

These are somewhat turbulent times in the financial space due to how fast interest rates are rising and inflation. You do not need to have all the answers. If you have questions about your personal finances, seek advice about the best strategy to pursue. Schedule a meeting with a Workers Way certified financial coach for a judgement-free conversation about your money. The more information you have, the more you will feel in control of your future.