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.