25 October 2015

It's Bank Failure Friday (A Week Late and a Dollar Short)

The 11th credit union of the year got closed last week, when the Helping Other People Excel Federal Credit Union was closed on September 16.

BTW, I think that I've figured out why more credit unions have failed this year than commercial banks.

Many of these credit unions are tiny by the standards of commercial banks, the money quote from the above link is, describes the institution as,  "A federally insured credit union with 96 members and assets of $290,927."

At those sizes, one bad house loan can take the institution down.

Hell, a bad car loan can take down the institution for a somewhat expensive car.

When juxtaposed with a structure that tends to mitigate against mergers, it means that there will simply be a lot more institutions.

With commercial banks, you've seen a lot of M&A activity, meaning that there are far fewer banks, with remaining institutions less vulnerable to the failure of an individual customer.


Post a Comment