Credit Unions Paying For Risky Behavior Of A Few - MSNBC

[WillyT]

Credit unions paying for risky behavior of a few
By Wendell Cochran
Investigative Reporting Workshop, American University
updated 12/21/2010 2:26:58 PM ET

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WASHINGTON — Two years after the height of the financial crisis, the American economic landscape still bears resemblance to a war zone: You never know when you’re going to step on another land mine.

Case in point: The nation’s credit unions, many of them tiny outposts in a realm of banking giants, some so small they can barely make a new car loan, let alone a mortgage. If you are looking for financial villains, you won’t find many in that world.

As a group, the credit unions make up a small part of the nation’s financial industry. Together, the 7,500 retail credit unions have about $729 billion in deposits, compared with about $9.3 trillion for the nation’s 7,800 banks. The four largest banks each have more deposits than all the credit unions combined.

But every credit union in the country finds itself paying to clean up a multibillion-dollar mess created by a handful of failed “corporate” credit unions, which invested heavily in now-toxic mortgage-backed securities peddled by Wall Street during the housing boom. The losses were allowed to continue as federal credit-union regulators paid too little attention, according to the regulators' own inspector general.

The wreckage is likely to restrict the ability of credit union borrowers to get loans to consolidate debts, to fix up their homes or to buy cars, boats and RVs. The number of credit unions is expected to continue to fall sharply, as it takes a decade for the credit unions to pay for a brief binge by just a few credit unions.

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More: http://www.msnbc.msn.com/id/40755408/ns/business-stocks_and_economy/

:kick:

[Lasher]

1. There should be repercussions for the regulators.

Since they clearly failed to regulate.