Wednesday, November 24, 2010

AFTRA-SAG Credit union asks key members to withdraw funds

From Company Town on the LA Times Web Site (click here for the full column).

Financial institutions typically don't ask customers to take their money elsewhere.

But the AFTRA-SAG Federal Credit Union, which is not affiliated with the actors' unions but serves many of their members, took the unusual step this week of asking well-heeled depositors to consider withdrawing some of their funds.
“Due to the unusual economic and market conditions, we are asking you, a select group of our large depositors, to move a portion of your funds to another institution," the credit union said in a letter mailed out this week. “This request is a temporary one, so we would like to explain why we are making this request: The Credit Union is ‘flooded with cash.’”
The letter went on to say that even though the AFTRA-SAG Federal Credit Union was flush with deposits, returns from investments in U.S. government-backed securities had been unusually low. At the same time, “most members are reluctant to borrow causing our loan growth to decline.” 
Interest income from loans is a key source of income for credit unions because they help maintain capital ratios required by federal regulations.

Click here to read the full story in the LA Times.

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