State to bail out credit unions amid default fears

[Newsy]

A state rescue fund for credit unions is being drawn up because of concerns that the community lenders are beginning to suffer from the same arrears and default problems that have been plaguing the banks.

The registrar of credit unions is publishing a consultation paper this week detailing six options for the Irish League of Credit Unions (ILCU) savings protection scheme, including having it taken over by the regulator or being wound down entirely and replaced by a statutory fund run by the Department of Finance.

The registrar and other senior officials fear the €118m ILCU fund is grossly inadequate to deal with widespread or large-scale in*solvencies among the league's member credit unions, which have combined assets of more than €14bn.

http://www.tribune.ie/business/article/2010/jun/20/state-to-bail-out-credit-unions-amid-default-fears/

How much more, in the name of God, an we shoulder??? :mad::mad:

[ang]

Newsy this government will continue to do as they please until they fulfill their intended agenda.

The only other way they will be stopped is when they are refused the borrowing power to do so.

[Murra]

I've no problem with the Govt bailing out the Credit Unions, after all, they are designed to help out the ordinary punter and the SME's, but I wonder if they will? There's no big money to be made for any individuals out of credit unions, so what's the motivation, and is it enough?

[DCon]

I've no problem with the Govt bailing out the Credit Unions, after all, they are designed to help out the ordinary punter and the SME's, but I wonder if they will? There's no big money to be made for any individuals out of credit unions, so what's the motivation, and is it enough?

The Garda credit union, and all the Garda/landlord housing loans, will be motivation enough

[Captain Con O'Sullivan]

As I've been saying on a couple of threads if FF and the Eunuchs get away with NAMA they will always look around for whatever other mess they can 'hide' in a bailout.

Expect more of this- NAMA will widen its scope to hide anything FF/Eunuchs don't want becoming public knowledge.

Thats the interesting bit- all these debts and associated paperwork will be paid for by the taxpayer without knowing who, why, or how these debts arose in the first place.

That is the raison d'etre for NAMA.

[Fing Fers]

http://www.tribune.ie/business/article/2010/jun/20/state-to-bail-out-credit-unions-amid-default-fears/

How much more, in the name of God, an we shoulder??? :mad::mad:

Ah here, why do I even bother going to work.

The problem is no room in the joy to lock people (in debt to credit union) up so instead use the money to bail them out.

[Captain Con O'Sullivan]

Not much point in involving the Gardai either as by all accounts there have been some extremely fishy goings on at the Garda Credit Union as well. I suspect that whats at the bottom of this is a bailout for that Garda Credit Union.

Rumour and one or two press reports suggest that there is a bit of an Anglo going on there as well.

Next month the NAMA bag will be opened up for FAS and HSE corruption and after that it'll be some friendly union which FF will want to keep quiet.

Basically every crooked little operation in the land will end up being charged to the taxpayer. Whereas the taxpayer will get bailiffs.

[C. Flower]

Here you go, Captain: the biggest Credit Union in the country:

http://www.independent.ie/national-news/toxic-loans-tarnish-the--garda-credit-union-books-2007218.html

[Captain Con O'Sullivan]

780,000 lent to a Garda to buy a pub? Something else I notice from the article- it mentions a number of defaults as a result of court orders- why are these Gardai's names being hidden?

If they are in default and an order has been made against them it should be public information. Please don't tell me that the Gardai. although trained in the reasons why a Garda should never be heavily in debt, have somehow managed to swing an exemption from newspaper reporting? I think its in the public interest to know whether some idiot of a Garda is in the hole to the tune of half a million.

What the name of blazes was a credit union doing offering bridging loans and what were effectively commercial loans? Is it even legal for a Credit Union to do this?

[Captain Con O'Sullivan]

I'm staggered at this kind of messing about by credit unions. I had a look to see what I could dig up on the Oireachtas site and I came up with the Joint Economic Regulatory Affairs examination of credit union regulation from March this year. It makes interesting reading- I notice the Credit Union rep pointed out that CUs are under pressure in two ways- one that their investment is screwed if they've lent and had to make provisions against increased losses- okay. The second thing is obviously where loans are not performing they are allowed to reschedule once- according to Credit Union practice.

It makes interesting reading this- particularly when you notice that the CU people were saying there's no problem until possibly end of first quarter next year (2011) and possibly not for another nine months after that.

This is June 2010 and the dread word 'bailout' looms. There should be NO bailouts of credit unions. They are not banks and their members own the Credit Union. There is a reserve system but thats only 10% of assets at best and if I've twigged what 'assets' mean to a credit union they've been reserving 10% of smaller amounts. Either way a Credit Union holds only members money. If the CU has been mismanaged then it will have to go into administration.

There is NO call here for public money and there should be no circumstances where a Credit Union should be bailed out. Its like a Co-op- once its bust its bust.
http://debates.oireachtas.ie/DDebate.aspx?F=ERJ20100527.xml&Node=H2#H2

By the way I note the first 15 minutes of the Committee sitting was held 'in private'. Strange litle Republic lads with all these 'private not secret' meetings going on. The amount of 'private' conversations being held by people paid with taxpayers money is also beginning to piss me off royally. There's no such thing as a 'private' meeting involving an Irish public servant. I know irish politicos like to daydream they are in Washington or somewhere but this 'private meetings' caper has got to be stopped.

[C. Flower]

If you remember, Brian Lenihan seems to have a holy fear of credit unions and the CU federation had to correct him over the little matter of whether they were or were not major bondholders of the banks.

Credit unions might be thought of as the place where people with nothing else keep their funeral money, where people put savings for childrens education, and, just perhaps, where a fair amount of nixer money still circulates.

[Captain Con O'Sullivan]

The thing is Credit Unions are effectively co-ops. If the members money is gone thats the end of it.

If anyone is suggesting public money should be used to bail out individual credit unions that again is a con.

Each credit union, although part of a worldwide link-up, is an individual co-op. The Gardai are on their own with that particular mess and if an Irish politician is suggesting CU's should be bailed out as a sector then there is something fishy going on- the only reason for it would be to bail out more pals such as senior Garda officers.

Have you noticed how they've managed to left debts off th banks and screw it into NAMA- as predicted they are now casting around for other messes to charge up to the taxpayer- some senior Garda gets off the hook and then owes the politician a favour.

These are exactly the scenarios that Gardai are warned about during training at Templemore- it leads to corruption.

[Captain Con O'Sullivan]

If you look at the item Newsy quoted in his/her OP and then read the laughable review of Credit Union status as recently as 12 weeks ago two very different stories are being told.

Everything was hunky dory according to the Committee 12 weeks back- and now all ofa sudden that they've screwed the banks debtsn on to the taxpayer this is the next area where the friends of Fianna Fail get a state sponsored digout.

There are 400 odd credit unions I think and a few of them are basically basket cases whereas the rest are mostly okay- if they need bailouts they should seek it from the rest of the Credit Union system- there is no excuse whatsoever for stealing taxpayers money a la NAMA to cover up badly run Credit Unions. Thats a matter for the members of the CU- not the Irish taxpayer.

[Newsy]

Everything was hunky dory according to the Committee 12 weeks back- and now all ofa sudden that they've screwed the banks debtsn on to the taxpayer this is the next area where the friends of Fianna Fail get a state sponsored digout.

That is exactly what it looks like. Something here really stinks......

[Captain Con O'Sullivan]

Looks like that report to the Oireachtas was a pile of moonshine wasn't it? Only 12 weeks ago and there were individual credit unions having to make provisions. 12 weeks later its 'oh we'll need a sectoral bailout',

I think it would be a very good idea for the members of the Joint Economic Regulatory Affairs Committee to get those Credit Union representatives and ask them some hard questions about their recent pack of lies or the pack of lies that has emerged today. Someone somewhere is telling a lot of porkies. At the very least the CU reps need to explain what has happened in the last weeks to produce such a startling turnaround from the happy set up of just those few weeks back.

In fact there is a very good case for firing the people who appeared in front of that committee if its found they gave rubbish evidence to the oireachtas.

[BrendanGalway]

12 weeks.....Seems like about 4-5 months or thereabouts I asked on a few websites as to the Health of the Credit Unions. No one gave any reason to believe they were in trouble. At least in the case of Anglo there were rumblings that something was up. this seems to have come out of the Blue.

For me, this line is Crucial :



ILCU maintains its members have strong enough reserves to deal with any problems.


As long as that is the case, there should not be a need to open the Public purse. While Im sympathetic to the cause, the ILCU should look to its own Resources first given how stretched we are rescuing Anglo and Property Developers. The Regulator it seems is about to run a series of Stress tests. I suppose we should get a clear picture of whats happening in there soon enough.

This is very disappointing. I had hoped the CU would have known better than to get swept up in the Bubble mania.

[Captain Con O'Sullivan]

Beg pardon all- just re-reading that evidence given to the Oireachtas concerning the financial health or otherwise of Credit Unions and I had pointed out that according to the evidence given to the Committee the CU didn't have a problem. Now I thought that evidence was given some 12 weeks ago- that was wrong. The evidence was given on the 27th May 2010, not 12 weeks back but only four weeks ago. And four weeks later the sector needs a bailout?

Here is the evidence given; http://debates.oireachtas.ie/DDebate.aspx?F=ERJ20100527.xml&Node=H2#H2

Extract: James O'Brien is the Credit Union Registrar.

Mr. James O’Brien: Credit unions are important and we believe the credit union movement will become even more important in the near future because of the shape of the financial sector. However, we should not be complacent. The credit union sector has done reasonably well but we need to be able to look forward and to take preventative measures where we see a risk. This is a preventative measure. We are not saying there are significant problems at present; we are looking a year to 18 months ahead.

Deputy Kieran O’Donnell: The strategic review could be completed within that timeframe.

Mr. James O’Brien: If the strategic review is completed in 18 months, it might be too late. We are now looking at a period where the stresses are increasing dramatically. We want to put a preventative measure in place where we help members while protecting the credit unions and the savers.

Deputy Kieran O’Donnell: How many credit unions are meeting the 10% capital ratio?

Mr. James O’Brien: We set a benchmark of 10% but we have also provided transitional arrangements for credit unions of 7.5%. The majority of credit unions are now meeting that 7.5%. A significant number of credit unions is also meeting the 10%.

Deputy Kieran O’Donnell: What would that figure be?

Mr. James O’Brien: About 84% of those meeting the 7.5%.

Deputy Kieran O’Donnell: That is 84% numerically speaking?

Mr. James O’Brien: Yes. They have total reserves of more than 10% of their assets.

Deputy Kieran O’Donnell: The assets are around €14 billion. What percentage of the top 100 credit unions are making 10%?

Mr. James O’Brien: We do not have figures for the top 100 credit unions.

Deputy Kieran O’Donnell: It would be reasonable to say that the credit union movement is unlike the banking sector. It is in a reasonably sound financial state.

Mr. James O’Brien: I said at the outset that if one looks at the sector overall, it is in shape but we do not want to be complacent.

Deputy Kieran O’Donnell: I accept that.