€100k limit on Credit Union deposits

Discussion in 'Credit Union issues' started by MrEarl, Dec 28, 2015.

  1. kmick

    kmick Frequent Poster

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    68
    As mentioned most credit unions in the country don't need deposits right now. Most already have deposit limits and there are actually very few CU customers who have more than 100k on deposit. Add in to this that the deposit insurance scheme only covers deposits up to 100k means anyone who has more than 100k deposit in any financial institution is essentially a lunatic.

    On the flipside CU's are being regulated out of existence because of a few bad apples while banks are not having the same rules applied. One has got to ask oneself why? I have asked myself the question why is the Central bank taking such an aggressive stance against the CU's and I think the answer is this - the CBI are not going to get caught out again where there is a chain of losses that they are on the hook for. And they are not giving any credit for the fact that most Credit Unions behaved well during the boom.

    Finally if you make the assumption that traditionally Credit Unions were the lender of last resort for those with poor credit or low incomes what you do now is push those people towards the moneylender where the rules become so tight they cant get money from the CU. The Central Credit Register will exasperate this for those with poor credit records because they will have to check this register for all credit being applied for over 2k.
     
  2. MrEarl

    MrEarl Frequent Poster

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    1,183
    It's death by a thousand cuts (for the credit unions) !

    Simply unbelievable how poor the ILCU appear to be in representing their member Credit Unions ... altough I suppose it's even more unbelievable that so many Credit Unions remain as members of the League.
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    32,824
    I am really astonished at this €100k limit argument.

    We have seen CANA reducing theirs to €70k.
    My credit union, Sandymount, reduced theirs to €50k some years ago.

    Name a credit union whose ability to lend to customers is limited by this restriction.

    The average credit union has lent 26% of its assets.

    They are primarily deposit aggregators. They take deposits from members and put them on deposit with a bank. They take a cut. The members would be far better off putting their deposits directly in the banks.

    Brendan
     
  4. willyfones

    willyfones Registered User

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    32
    Hi Brendan,

    I think you are missing something there,, true your Credit Union takes your shares and puts them on deposit with a bank, however a Credit Union member gets a huge return on its cash in the CU v the bank.

    Credit Unions take a big loss on members 100k in shares. example below.

    CU puts 100k of members money into the bank (on call/instant access money) gets about .01% from the bank. 10 euro
    CU pays out to its member in dividend maybe 1% or 1.5% so the CU pays out 150 euro to the member - costing the CU 140 euro

    I think the Credit Unions should forget about paying out such a handsome dividend and focus maybe on reducing lending rates.
    I suspect the banks leaning on the Central Bank understand that Credit Unions could have the ability to vastly reduce their interest rates for car loans/personal loans if they were allowed to do so (by the CB).
     
  5. Brendan Burgess

    Brendan Burgess Founder

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    32,824
    Hi Willy

    You are making my point for me. If the Credit Unions are losing so much money on their members' shares, why on earth don't they return the money to the members?

    Brendan