My Credit Union has Low Rating from Bankrate.com

What hassle? Normally, an FDIC takeover means that the bank (credit union) closes on one day, then reopens the next with a new name. It's happened to me several times. No change in account numbers or anything.

Of course, if you are past the various insurance limits, that's a different story.

-- Doug

Minor nit - credit unions are usually not FDIC-insured. Instead, they are usually members of the NCUA. Their limits are the same as the FDIC.

Anoop

The FDIC doesn't insure credit unions. They are insured by the NCUA. National Credit Union Association. Thumper

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I assume you mean:

(Navy Federal)

It's NCUA. There's not much hassle. Almost all the time the takeover happens on a Friday and the new institution is in place on Monday.

Also note that their asset quality (i.e. their loans to members) is quite high and they have a huge loss reserve ratio (132.49%).

-- Rich Carreiro snipped-for-privacy@rlcarr.com

In the small fraction of institutions that are not sold, the FDIC trasnfers your account to another bank of your choice. Or sends you a check within 30 days. This happened at New Frontier Bank of Colorado.

Nope, it's not Navy Federal.

Thanks for the replies. Good to know it's not a big hassle if a takeover occurs.

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What if the FDIC is broke, as in

and, byanalogy, the NCUA ? Truly, it's better to be safe than sorry. Checkyour bank at And in case you?re wondering where to park your money: Besides, by moving to a more solid bank, you would be contributing to the preservation of the FDIC or NCUA funds.

HTH

It's not broke. Its fund from member bank premiums may be running out, but it (a) has a line of credit with the US govt it can use to pay off depositors of failed institutions, and (b) its obligation to pay off depositors of failed institutions is guaranteed by the US govt.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

If it runs out of funds, it IS broke, whether there's a line of credit with taxpayers' dollars or not.

So, instead of placing this burden on other taxpayers, the sensible thing is to run from banks with liquidity problems. There are many more reliable banks out there.

Just to add some info here, my credit union's online blurb, full of happy talk, of course, and saying that all is well, mentions that the premiums they pay to the NCUA, to insure against collapses of other credit unions (and themselves!) , went up, and that they had paid this year's premium in full, whereas other CU's were going to pay over time.

Gee. If you are worried about us poor taxpayers, you should put your money in banks with liquidity problems, it will help them stay solvent.

But even if the FDIC does borrow from the Treasury, it is a loan. Except in the most extreme of circumstances, it will be paid back when the bank's insurance premiums catch up. -- Doug

I just got a letter from a CU that they are switching from NCUA to ASI (a private insurer owned by the participating CUs) because it's cheaper (NCUA demanded over $600000 from them) and more selective about admitting its affiliates.

no government backstop, though?

I don't think so.

Access to the Treasury by the FDIC is limited to $500B, not enough to cover a couple of big national banks currently in the tank...