Are my saving safe in the Credit Union?

brian ireland

I have a few quid in the credit union, I started to put some cash there in the good times and it built up a bit.

I am not too well up on all this burn the bond holders talk, but I did hear on the radio today that some credit unions are bond holders.

Would I be better off taking it out or is there no need to worry?

gigino

Do not trust Irish government promises or guarantees. Tens of thousands of people were enticed to put their savings in to section 23 / 27 government tax incentive properties, often with a mortgage. After these people were "hooked" and had bought the properties and the government had received stamp duty, vat, income tax etc from the sale of the properties, the government changed the 10 year tax rules on these properties in the last budget. Investors got kicked when they were down. Moral of the story ; do not trust the Irish government, move your money out of the country. A euro a/c ( or stg a/c ) in UK based bank would be safer than an Irish institution. Especially when you look at the track record of the Irish regulator, central bank etc. Investors have learnt their lesson, huge sums are flowing out of the country every month. And good enough for the government for burning those who invested - for their future pension -in the Irish economy ( through section 23's, irish shares etc ) over the years. The government did not burn their own pensions, or those of their mates in the regulators office, central bank, dept of finance etc.

Godge

Credit union savings depend on credit union loans being paid back. The relative safety of your money in a credit union depends on how prudent the credit union was in lending money. If it recklessly lent large sums to people for deposits on property speculation (as some are alleged to have done) then your money could be in trouble. If they lent smaller sums to those in secure employment with a good history of repayment, your money is as safe as anywhere else.

MagicSean

I'll be keeping my borrowings higher than my savings in the credit union anyway.

paul71

Last AGM of my credit union I tried to raise the issue of the bad debts in the accounts which stood at €750,000 write off for the 2 years (the shareholders deposits are less than €5,000,000). Things got heated when I asked for and was supported by several others who asked the entire credit committee to resign. As the board would not allow this go to a vote I felt I had no choice but to withdraw all my money the following Monday.

Credit Unions are exposed in the current climate, many of them did lend recklessly and do not have the expertise or indeed the will to recover debts.

Slydice

As far as I know ... most credit unions can operate in different ways.

They can probably be bank bondholders or government bondholders... depending on where they invested their cash.

you'd really want to be investigating into what your credit union has invested in

aftermn

To the best of my knowledge, Credit Unions are covered by the government guarentee on deposits in the same way as the banks are, i.e. individual deposits of up to 100K are guarenteed.
Thus you will get your money back, at least as long as that guarentee is honoured. But then all depositors are in the same position, banks and credit unions alike. (Maybe you have more then 100K?)
I would agree to a degree with the previous poster who advised keeping some money abroad. A dollar or sterling account (both have their risks),, maybe some multinational shareholding (also has it's risks), or some bondholdings (yes, ditto).
There are no certainties.
Have many children. Look after them. The best investment known to man.

CrankyCod

The Credit unions were the only part of the financial markets that were strictly regulated during the boom, with the result that the majority of them are in very good shape. They were restricted in their operations, I suspect so that the banks would not be threatend by not-for-profit organisations.

Deposits are guarenteed so there is nothing ot worry about. The only possible risk is the wider one that the entire financial system collapses but the EU cannot allow that to happen.

Credit unions are worth supporting as they are based on community/cooperative principles rather than greed; ideas that we need to extend to the rest of the economy if we are to recover.

RichardAnd

CrankyCod wrote: »

The Credit unions were the only part of the financial markets that were strictly regulated during the boom, with the result that the majority of them are in very good shape. They were restricted in their operations, I suspect so that the banks would not be threatend by not-for-profit organisations.

Deposits are guarenteed so there is nothing ot worry about. The only possible risk is the wider one that the entire financial system collapses but the EU cannot allow that to happen.

Credit unions are worth supporting as they are based on community/cooperative principles rather than greed; ideas that we need to extend to the rest of the economy if we are to recover.

I'd just like to point out that there is a difference between working to make a profit and greed. I'm not sure you're trying to imply that profit = greed but that's the air I got from your post.

ilovesleep

RichardAnd wrote: »

I'd just like to point out that there is a difference between working to make a profit and greed. I'm not sure you're trying to imply that profit = greed but that's the air I got from your post.

The banks were greedy. Pure and simple. Luring people in with cheap credit.

CrankyCod

RichardAnd wrote: »

I'd just like to point out that there is a difference between working to make a profit and greed. I'm not sure you're trying to imply that profit = greed but that's the air I got from your post.

My point was made in the context of our dysfunctional financial system which was and is run purely by greed, and provides very little value to society. Credit Unions are run for the benefit of members and the local community.

The concept of operating a business for a reasonable profit is utterly alien to the banker mindset, in Ireland and everywhere else.

ressem

paul71 wrote: »

Last AGM of my credit union I tried to raise the issue of the bad debts in the accounts which stood at €750,000 write off for the 2 years (the shareholders deposits are less than €5,000,000).
...
Credit Unions are exposed in the current climate, many of them did lend recklessly and do not have the expertise or indeed the will to recover debts.

Agree, but regarding the bad debts write off that you've stated.
The financial regulator's auditors are demanding that when a loan repayment is renegotiated, or has 3 missed payments I think it is; that 100% of the loan be treated as bad debt regardless of collateral until a year's payments have been made.

As a result the figures are going to look dreadful for the credit unions for a couple of years and you'll need to harangue the directors for details on percentage of loans renegotiated, legal actions to chase loans etc.

Having said that that's an awful number relative to the deposit base. If it was being added to bad debt reserve it'd be ok, but not written off.