The Real Cost Of the Corporate Credit Union Clean Up

Hi Everyone,

For those of you not in the credit union world we've been cleaning up a corporate credit union mess.  Corporate credit unions are credit unions that credit unions like mine can join.  Two of these corporate credit unions invested in some really crappy investments.  I could go on and on about the crappy investments but I'll save that for another time because something's really bugging me.  The cost of the corporate credit union bailout will run somewhere between $10 and $16 billion.  In the world of high finance that's not a whole lot but in the credit union world that's a ton because we don't take up much space in the world of high finance.  Every year for the next seven or eight years every credit union will be assessed by our regulators.  In 2010 the range we've been given is 15 to 40 basis points.  Trust me, it will be 40 basis points at the least.  The real cost for credit unions is this.  A credit union likes to have say, around 9% capital.  If you take $16 billion, the cost of the the corporate clean up, and divide it by 9% you get $178 billion.  That's the amount of growth the credit union movement will forgo to clean up this mess.  That in the credit union world is a lot of growth.