Should it not be to cover loans and a percentage of the deposits?Hi Scone
No. They need to have reserves to cover their assets which includes cash on deposit and loans. That is reasonable and if the Credit Unions got rid of their surplus cash, the reserves required would fall.
The credit unions had no idea what they were doing so they invested in bad bonds. The Regulator was right to stop them from doing so.
If the members want to buy speculative bonds individually, that is fine. But they should not be giving the Credit Unions surplus money to invest in bonds.
The Credit unions have no where to put their money.
It was with the advice from the League of Credit Unions and financial advisers that pushed our credit union to invest in bonds. It was the regulator after the crash that gave the big bond holders their full investment back and only a small percentage to our credit union. Massive write off that year but the staff got a pay rise!