# Credit Unions in Trouble



## KeyPoster

Has anybody seen todays Irish Times.

[broken link removed]

It seems some credit unions are carrying so many crap loans that they are technically insolvent . 

If their regulator pressurises them (as he did Monaghan ) to clean up their books and to write the crap off then they could be in serious trouble in certain cases. Others will survive the cleanup . Others do not need to clean up at all. Look what happened to Monaghan afterwards here and more worryingly [broken link removed]. 

Thats why some of them joined the Irish Credit Bureau recently, trying to spot the vermin before it gets its money,  but I would worry more about some of the ones who did not TBH .


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## ontour

technically insolvent... how .... all of the loans are insured.. risk is that they are above guideline which would mean that they should collectively be making larger allowances against bad debt.

Ironically they generally have lower bad debts but due to the disperate nature of the business the closure of a factory in a town could put a particular credit union in to serious difficulty..such regional and localised factors are not suffered by the other lending institutions.

My personal belief is that there is a desire to have fewer credit unions with a gretaer ability to provide a more professional service and have more to invest in IT.  It is very difficult for the credit union movement in ireland to present a homogeneous service offering when some credit unions operate with assets of hundreds of millions and others aren't in to hundreds of thousands.


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## Glenbhoy

I've never had any dealings with CU's - what advantage do they offer over banks?  From my limited understanding, it seems to be that its a more personal service, wth the result that it's much easier to get loans, you then pay a slight premium for this.  If the loans are insured, you would presume that the insurers are happy with the loan vetting procedures,  but obviously there are problems, anyone fill me in on what the vetting  procedures are?


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## soma

Glenbhoy said:
			
		

> I've never had any dealings with CU's - what advantage do they offer over banks?


Well for a start, in the last five years they have been the ideal way to borrow a deposit for a house, so that it won't show up when a mortgage bank does a search. Of course this has been changing recently.

I'm wondering if jumbo mortgage repayments have caused some CU borrowers to neglect their CU repayments seeing as CUs are traditionally seen as a soft-touch.


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## Guest107

They were frequently supplying the other 10% of the mortgage until the banks started doing 100% mortgages in certain cases.


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## elcato

Credit unions allow you to pay back any amount at any time without penalty. You will only be charged interest on the balance of the money you have borrowed. Their lending criteria is also a lot lighter than banks, its based on past history both on loans and on deposits. Their rates vary but are generally around 7.5% which is quite competitive.


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## Purple

They are also used to hide cash from the tax man by the same people who go on about corruption...
At least that's the case with two people I know.


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## Glenbhoy

> Well for a start, in the last five years they have been the ideal way to borrow a deposit for a house, so that it won't show up when a mortgage bank does a search.


My time auditing mortgage approvals left me well aware of that!!


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## CCOVICH

Re. the insurance issue-the borrower is insured, but the CU isn't-right?

Hence they (the CU) could become inslovent due to high levels of bad debts.


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## ontour

credit unions are also insured, it is tied in to being a member of the Irish League of Credit Unions.  Part of the membership fee is the insurance. There have been a number of cases whereby large sums of money mysteriously(!) disappeared from a credit union.  The members of those credit unions have never lost that money.

As an aside, the tying of the insurance premium to membership of the ILCU is the reason some large credit unions have left the ILCU.  They believed that it was more competitive to acquire this insurance on the open market.

Credtit unions like any lending institution have bad debt provisions which are based on a percentage of loan book, this is monitored and adjusted on an annual basis based on delinquency profile and size of loan book.  

If every member in the country decided not to pay their loans then there would be a problem giving members back all their share money but quite an unlikely scenario


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## CCOVICH

But is the credit union insured against the bad debts of it members?  If it is, then surely they wouldn't have bad debts in the first place?

Or is it that they have some form of insolvency insurance through ILCU?

I understand that members loans are insured in the event of death etc.


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## Eurofan

CCOVICH said:
			
		

> But is the credit union insured against the bad debts of it members?



I'm curious about this as well. I'm aware of insurance against theft etc. but was under the impression that bad debts were _not_ insured. There's provision on the books each year but it seems to be far from what neccesary to cover the problem.


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## dam099

ontour said:
			
		

> credit unions are also insured, it is tied in to being a member of the Irish League of Credit Unions. Part of the membership fee is the insurance. There have been a number of cases whereby large sums of money mysteriously(!) disappeared from a credit union. The members of those credit unions have never lost that money.


 
Is the insurance insuring the members deposits or repayment of loans? 

It is possble that if the insurance just covers the members deposits that insolvency in the event of a sufficiently high bad debt rate would result in winding up the credit union and using the insurance to meet any shortfall in members deposits. In this scenario the credit union would likely cease to exist but the members wouldn't lose any money 

For the credit union to continue the insurance would have to cover the defaults returning them to solvency (or preventing them ever being insolvent). As others have pointed out there would be no need to make a provision for bad debts if the insurance covered them.


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## elcato

> I understand that members loans are insured in the event of death etc.


Yes. If you die your loan dies with you and they also give triple (or so) your share value to give to your next of kin. This is why old people always were members long before the current wave of younger members. It was known as the burial money. It also is the reason that they tell you to borrow and leave existing shares in your account.


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## Guest107

They were also prepared to lend to sub prime candidates at decent rates which was about half of the population of the state only 20 years ago.

The banks would not go near you back then even if you DID have a job , who do you think paid for Italia 90,  the banks or the credit unions ???


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## ontour

oh to be able to answer questions !!  Credit Unions have an Loan Protection Scheme and a Share Protection scheme.  The loan protection scheme would clear your loan in the event of death and the share protection scheme would provide a multiple of your shares in the event of death.  The multiple depends on the age at death.  Shares are capped at something like 6 or 10 grand, everything above that is deposit and not covered by this death insurance.  
The Irish League of credit unions have a vested interest in protecting the good name of the credit union hence their willingness to support an individual credit union in financial difficulty.  Again it is theoretically possible to not have enough money to pay all the share and deposits if all the loans went bad but unlikely..  It has not been all good times since the ILCU was set up nearly 60 years ago !

Not sure if the status of a credit union as regards legal company structure would enable them to become tecnically insolvent.. would need one of our legal buffs for that one !!

ALso a number of the largest of the credit unions are profession based ( gardai, health, teachers etc)  where payments are made by deduction from payroll so it is very secure.  Local credit unions have lower bad debts because they are run by people from the locality and therefore there is less of an tendency to short change the neighbours.  If you are short of cash you will probably pay the credit union first so that the locals involved in the credit union don't know that you couldn't really afford the new massey ferguson !!!


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## Joe1234

2Pack said:
			
		

> Has anybody seen todays Irish Times.
> 
> [broken link removed]
> 
> It seems some credit unions are carrying so many crap loans that they are technically insolvent .
> 
> If their regulator pressurises them (as he did Monaghan ) to clean up their books and to write the crap off then they could be in serious trouble in certain cases. Others will survive the cleanup . Others do not need to clean up at all. Look what happened to Monaghan afterwards here and more worryingly [broken link removed].



I am a member of Monaghan Credit Union, and I believe it is solvent.  Monaghan Credit union has been ordered by the regulator not to pay it's proposed dividend for last year, presumably because of the high level of bad debts.  Approx 10% of the total loans outstanding at the start of last year were written off.  Therefore, I, and 16,000 others are missing out on a dividend of over €700,000.  In the days after the AGM there was a rush of people withdrawing savings from the credit union.  For some, it was the threat of insolvency, for others it was the fact that a 1% dividend (which has not been paid) is pittance for a credit union to offer, and many banks are offering  4 or 5 times that.


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## thewatcher

If i was a member of your credit union,i would be looking into getting the entire board sacked.Surely the members are not going to let these fools away with this ?


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## ontour

simplistic view to get the board sacked... who will replace them... it is not as if there is a queue of people lining up to do volunatry work these days

What I find most surprising about Monagahan CU is that it is big with a large staff and should be in a better position to control their loan book.

Was there any local reason for so much bad debt?  big local factory closure?


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## Joe1234

It is a big credit union, probably with too many staff.  A number of years ago, loans were given out to all and sundry, and there is a belief around Monaghan that a large majority of these loans were given to non nationals, who skipped the country.  They have implemented new procedures now, but the damage has been done.


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## Howitzer

Joe1234 said:
			
		

> It is a big credit union, probably with too many staff. A number of years ago, loans were given out to all and sundry, and there is a belief around Monaghan that a large majority of these loans were given to non nationals, who skipped the country. They have implemented new procedures now, but the damage has been done.


 
This sounds like nonsense. A case of "It be dem blacks dats ruined it fur de rest uf us", eh?

A search through any property related thread on AAM will throw up people giving and seaking advice along the lines of, if you want a loan that no one else will give you then go to a Cedit Union, oh and be sure to make sure they're not affiliated to the ICT, or whatever it is, so that the real banks don't find out about it.

The abuse of the lax lending procedures of many/most Credit Unions seems pretty endemic to me, and certainly isn't confined to dem der blacks.


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## CCOVICH

Howitzer said:
			
		

> A search through any property related thread on AAM will throw up people giving and seaking advice along the lines of, if you want a loan that no one else will give you then go to a Cedit Union, oh and be sure to make sure they're not affiliated to the ICT, or whatever it is, so that the real banks don't find out about it.


Yes, that certainly rings true with me as well.

And I think you are referring to the ICB-Irish Credit Bureau.


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## Guest107

Joe1234 said:
			
		

> there is a belief around Monaghan that a large majority of these loans were given to non nationals, who skipped the country.



Which ignores the hard reality that the money was given out by Monaghan people who should have used their judgement better  .

I'd say most of the bad debt is with locals who are still there. Better blame dem der non Moanaghaners all the same  .


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## ontour

more politically correct way of putting it is the mobility of the workforce has compounded the problem of pursuing defaulters on loans.  

Anecdotally I have worked with foreigners in Ireland who borrowed from banks and then decided to leave without paying off the loan.  They knew that the level of their loans were too small for the banks to be bothered pursuing. Doubt that ICB makes any difference in these cases as I don't think that it would have international information or does it? And to dispell the obvious stereotypes, these were white south africans and kiwis !!


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## CCOVICH

Can we please eave the race issue out of what is a potentially interesting discussion.

Thanks.


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## Joe1234

Howitzer said:
			
		

> This sounds like nonsense. A case of "It be dem blacks dats ruined it fur de rest uf us", eh?




Please read my previous post again.  When you do, you will read that I said I am only pointing out that "there is a belief......."  At no point did I state it was a fact.


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## Joe1234

2Pack said:
			
		

> Which ignores the hard reality that the money was given out by Monaghan people who should have used their judgement better  .
> 
> I'd say most of the bad debt is with locals who are still there. Better blame dem der non Moanaghaners all the same  .



That is indeed a harsh reality that my savings in the credit union were recklessly handed out by an incompentant management committee/board of directors.  Which is why I am currently shopping around for the best rate on deposits and as soon as I find it I will be moving the bulk of my savings there.

2Pack, I assume (and hope) that your use of the term Moanaghaners was a typo error.


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## Guest107

Joe1234 said:
			
		

> 2Pack, I assume (and hope) that your use of the term Moanaghaners was a typo error.



twas me being funneh about those who blame our cousins for local problems in Monaghan.

10k (check the actual figure) of your money is guaranteed no matter what, I think the banks guarantee 25k or 30k . The rest would evaporate in the event of a collapse of an institution.

and this is a national problem related to volunteerism being in decline.


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## RainyDay

ontour said:
			
		

> Anecdotally I have worked with foreigners in Ireland who borrowed from banks and then decided to leave without paying off the loan.


I know of several Irish who took out 'car loans' and buggered off to Oz/NZ with the proceeds, with no intention of repaying the loan.


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## Howitzer

Defaulting on loans isn't something that's confined to any particular group.

For me the real issue is what could be a terminal decline of the Credit Unions. The Credit Union movement was always built on the notion of neighbours, friends and family in the local catchment area using their savings to give loans at very low rates to people who may not have been able to get any loan from the regulated financial instituions. 

The reason why they were able to give these loans was trust. If you defaulted on your loan you were effectively robbing money from your friends and neighbours. 

Ordinarily a Credit Union would only ever become insolvent in exceptional circumstances, local factory closing, somebody fiddling the books. You would hope that the Monaghan case has some such similar background. To accept that the principle of the Credit Union movement is no longer viable in Ireland due to a more transient population and a subsequent fall off in commuinity values would be a pretty sad thing, not to mention the financial implications, the fact that people who previously could only get loans from the Credit Unions would now have to resort to subprime lenders.


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## Guest107

Howitzer said:
			
		

> To accept that the principle of the Credit Union movement is no longer viable in Ireland due to a more transient population and a subsequent fall off in commuinity values would be a pretty sad thing, not to mention to financial implications, the fact that people who previously could only get loans from the Credit Unions would now have to resort to subprime lenders.


That is my worry in a nutshell Howitzer. The credit commitees do not know the borrowers (as much as they did) and the borrowers  do not care about robbing their neighbours and friends  (as as much as they did) and the whole system does not have the quality of volunteers to run and man the credit committee (as much as they did) so the proposition on which they are constructed breaks down , especially in Urban areas with large transient populations.

Monaghan may only be the first of many . Its sad really.


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## lff12

Glenbhoy said:
			
		

> I've never had any dealings with CU's - what advantage do they offer over banks? From my limited understanding, it seems to be that its a more personal service, wth the result that it's much easier to get loans, you then pay a slight premium for this. If the loans are insured, you would presume that the insurers are happy with the loan vetting procedures, but obviously there are problems, anyone fill me in on what the vetting procedures are?


 
The whole agenda of credit unions are towards providing a community services, whereas banks exist for the benefits of their shareholders, simply to make a profit.  Therefore credit unions see themselves as duty-bound to consider the welfare of the applicant more than a bank would.  They exploded in the 80s after tighter regulatory constraints on moneylenders made it not only less attractive, but created a vaccum where small loans were concerned.

What has been worrying is an increasing trend for credit unions to move away from traditional lending criteria - basically offering loans of multiples of the borrowers shareholding - which means that a union may be stretching the terms of what the borrower can afford.  Also applicants - espcially somebody desperate for a loan to place as a house deposit - may be less than honest with the union, which places more risk with the union.

In the UK there is increasingly heavier pressure to setup a local credit union presence as as much as 20% of the population are now "unbanked" (i.e. have no bank account) creating a large level of financial exclusion.  Its easy to talk about this from a shareholder persepctive, but it becomes more difficult and expensive for those without full banking facilities to exist if they don't have expected banking resources to use.

there is a very intersting discussion on credit unions and lending to those on low incomes in general, from a UK persepctive on [broken link removed]


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## MandaC

A newspaper report I read stated that there was a large fraud ring (East European) involved in the Monaghan Credit Union debacle.  People were taking out loans and then vanishing from their rented addresses (across the  border). Not being from the area, I dont know how true that is??


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## Joe1234

MandaC said:
			
		

> A newspaper report I read stated that there was a large fraud ring (East European) involved in the Monaghan Credit Union debacle.  People were taking out loans and then vanishing from their rented addresses (across the  border). Not being from the area, I dont know how true that is??




This is the RUMOUR that I have also heard, and my earlier post referred to it.


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## Murt10

Bang goes another theory. I thought Credit Unions were only for relatively small loans.

From the judgements section of todays Sunday Business post

"Patriarca, Reno
   E238,425    of 109 Parnell St appt 116. Dublin. gentleman  Plaintiiffs: Firhouse Credit Union Ltd Dublin (HC) Reg May 18 2006"

What in the name of heaven was a local credit union giving out such a large loan to any individual. I'm glad that I'm not a member of that particular Credit union. 


Murt


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## Slim

> I thought Credit Unions were only for relatively small loans.


 
Traditionally, this was the case. However, there was a significant liberalisation of the law through the Credit Union Act, 1997. CUs now assess the ability of each member to repay the loan. Loans have got larger but many are secured against property or guaranteed by a guarantor. However, many local CUs have not changed their Board membership significantly. This should mean they remain conservative but also that they are not able to calculate risk as well as other financial institutions. I, too, would be concerned at the size of the loan Firhouse issued but I might then be assuming that (a) the borrower was a non-national and (b) that it was an unsecured loan. We do not know the facts.

It seems that there are urban legends growing about non-nationals borrowing from CUs and skipping off. This has happened but it should not be blown out of proportion. CUs are bound to "write off" loans that are in arrears once they exceed certain timeframes without payment. This is an accounting exercise that seems not have been applied rigorously in the Monaghan case. Therefore they had to write a load off in one year, causing the crisis. Credit Unions are not in trouble. There is a huge fund in the SPS 9over €90m) to bail out CUs if needed.

However, CUs need their members to support them by borrowing responsibly.

Slim


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## Marie

As a founder member of a Dublin Credit Union (in the late 1960's) I am very sad to hear about the crisis for Credit Unions in the Republic.  During my late teens (mid-60's) all concerned - Board, officers and cashiers - were volunteers who gave their time to get these very important associations going at a time when many Dubliners were indebted for life to unlicensed immoral 'door-to-door money-lenders' who charged extraordinary rates of interest........and when the only alternative was the pawn-shop.  Yes, originally loans were proportionate to your shares as the primary idea of C.U. was to foster financial prudence as well as assist people of lower income who did not have bank accounts (they didn't have the money to put in them!) to educate their children, or finance medical treatment etc.  The underlying 'trust' was represented by 'the common bond' and C.U.'s were only open to members of a specified labour-group (e.g. C.I.E. employees) or a particular geographical area which was closely specified.

They had unfortunately begun to lose their distinctiveness and identity under the pressure of the economic boom and the manic attitude to spending, debt and especially property-speculation.  Their collapse is a great loss to society as a whole, especially young couples starting out, pensioners who could rely on loans to tide them over emergencies, and those who work in 'casual', or short-term contract, or less skilled jobs.   



			
				Howitzer said:
			
		

> Defaulting on loans isn't something that's confined to any particular group.
> 
> For me the real issue is what could be a terminal decline of the Credit Unions. The Credit Union movement was always built on the notion of neighbours, friends and family in the local catchment area using their savings to give loans at very low rates to people who may not have been able to get any loan from the regulated financial instituions.
> 
> The reason why they were able to give these loans was trust. If you defaulted on your loan you were effectively robbing money from your friends and neighbours.
> 
> Ordinarily a Credit Union would only ever become insolvent in exceptional circumstances, local factory closing, somebody fiddling the books. You would hope that the Monaghan case has some such similar background. To accept that the principle of the Credit Union movement is no longer viable in Ireland due to a more transient population and a subsequent fall off in commuinity values would be a pretty sad thing, not to mention the financial implications, the fact that people who previously could only get loans from the Credit Unions would now have to resort to subprime lenders.


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## Howitzer

Regulator to stress test Credit Unions

[broken link removed]


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## Carey

This will be interesting to say the least. I bet some of the country ones are absolutely bricking it.


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## TLC

I believe that some Credit Unions lending practices did get out of hand over the last few years, I think this was due to the availability of "cheap" money from the main banks & the CU's thought that in order to compete they had to bend their rules & previous standards.  It was unfortunate but quite understandable, they felt under pressure. The CU's in the past have been a godsend to people & personally I hope that they will be again.


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## Slim

Carey said:


> This will be interesting to say the least. I bet some of the country ones are absolutely bricking it.


 
Why do you say 'country' credit unions would be bricking it?

Slim


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## Carey

Many of them are in trouble. They lent huge amounts of money that they cannot now reclaim. 
Many were recklessly lending money to people who shouldn't have had loans.


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## Padraigb

Carey said:


> Many of them are in trouble. They lent huge amounts of money that they cannot now reclaim.
> Many were recklessly lending money to people who shouldn't have had loans.



Do you know this, or are you recklessly posting suppositions?


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## Carey

I knows this. I know of one that is extremely badly run by people not fit to run a corner shop let alone a credit union.


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## Slim

Carey said:


> Many of them are in trouble. They lent huge amounts of money that they cannot now reclaim.
> Many were recklessly lending money to people who shouldn't have had loans.


 
But is it that you are ony familiar with country CUs? Slim


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## kaplan

*credit unions the slow motion train wreck*

Slim the "huge" fund you wrote of appears to have sprung a very large leak - of the alleged €125m (there's no independent corroboration of this value) it seems €45m has been soaked up guaranteeing loan loss insurance support for 15 credit unions of the 510+ ILCU says its scheme "protects". 

This thread is analogous to watching a slow motion train wreck and you can just about hear the incontinence pads being unwrapped in board rooms across the country as reality dawns. 

Meanwhile ILCU keeps saying organges(credit unions) are not as green as apples(banks) to deflect scrutiny of its own precarious financial condition


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## kaplan

The key to understanding the credit union crisis is not how many loans have gone bad but what the embedded value of the business in on a going and gone concern basis. On a gone concern basis a large number are insolvent as the losses incurred in unwinding short term unsecured troubled loan books would wipe out solvency overnight. On a going concern the key is to understand what the impact of loan losses will be over time - this is why there has been a massive amount of loan rescheduling as credit unions adopt a hope and see response - the hope to see their loans being repaid. But as they cannot control the outcome as there is nothing they can do to influence the loan repayment capacity of their borrowers, they must mark down the current value of their loans based on what they realistically (not optimistically) believe the loan loss experience will be and not just what the existing arrears figures are. Thus bad debt provisions are both backward - accounting for known losses and forward looking -accounting for losses likely to be incurred. Reserves are the backstop when foward projections undershoot actual experience.

Few have bitten this bitter bullet which is why the regulator is so concerned - it's finding significant underprovisioning which means of course that solvency is being massaged. Few credit union boards will realise they are effectively putting rotten meat into the freezer.


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## Paddyman

I am a member of a credit union and I have noticed change over the years from the old co-operative ethos to a business run by a "professional manager" with no links to the community. It is similar to what happened to the farmers co-ops.
  As for loans I wonder how many were given out to the families and cronies of board members for business purposes. And how many were given to board members in an outbreak of mutual back-slapping? Was there due diligence?
  I worry about the future of the Credit Union Movement - that the hard work and sacrifice of founder members will go down the drain. 
  Maybe the time has come to put our C.U. savings under the mattress!


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## Complainer

Paddyman said:


> Maybe the time has come to put our C.U. savings under the mattress!


Or maybe to go to the AGM and voice your concerns? Or bring along a posse and get yourself elected as director, and fix it from the inside?


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## Crugers

Paddyman said:


> ...As for loans I wonder how many were given out to the families and cronies of board members for business purposes. And how many were given to board members in an outbreak of mutual back-slapping?...


The value of loans to Officers/Board is disclosed in the year end accounts that must be given to all members. Usually in the 'Notes' section under a heading "RELATED PARTY TRANSACTIONS".
HTH


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## Hoipolloi

Does anyone know what the situation is re Credit Unions and the IMF, in the event that the Govt goes that route? Would it be worth putting a couple of bob into a CU a/c - as far as I know they're separate entities from the banks and possibly wouldn't have their deposits frozen in the event that the Govt/IMF took that action  to preventa run on  bank deposits.  This is, of course, presuming the CUs don't collapse in the meantime!


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## ontour

Hoipolloi said:


> ............as far as I know they're separate entities from the banks and possibly wouldn't have their deposits frozen in the event that the Govt/IMF...........



Credit Unions do not have clearing facilities so just like you and me they have bank accounts.  Different credit unions use different banks depending on what is 'local'.  Of the credit unions I know, they have a relationship with only one bank but buy a variety of investment products from organisations such as Davy's as we have seen in the news.  I would be interested to know if many credit unions have moved their funds to non Irish banks or diversified their banking relationships.

If the banks had failed, many credit unions would have closed the same day as the money in the safe in the credit union would have run out in 10 minutes.


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## Hoipolloi

Thanks for that - I'll leave the few bob where it is and rely on the kindness of strangers ...


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## DB74

Crugers said:


> The value of loans to Officers/Board is disclosed in the year end accounts that must be given to all members. Usually in the 'Notes' section under a heading "RELATED PARTY TRANSACTIONS".
> HTH


 
So I should see Seanie Fitzpatrick's loans from Anglo in the Related Party Notes in their accounts


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## Crugers

DB74 said:


> So I should see Seanie Fitzpatrick's loans from Anglo in the Related Party Notes in their accounts




Yes I suppose there is no guarantee that the notes aren't opaque. You do have to rely on the fact that:


_"...auditors should be alert for evidence of material related party transactions that are not included in the information provided by the directors..._


_...Nevertheless auditors should be alert for evidence of transactions that appear unusual, such as:..._

_*...*_
_*(e)* unusual transactions that are entered into shortly before or after the end of the accounting period..."_
(From: http://www.accaglobal.com/students/student_accountant/archive/2000/1/30933)


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## DB74

I can see the audit team now:

Member 1: I think there might be a problem with the directors loans in this bank

Member 2 (looks up from computer): Wha? Don't worry about that - the bank is grand. C'mere - how many marks out of 10 would you give this blond trainee?


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## kaplan

Credit unions are the same as any ordinary business when it coms to exposure to bank closures. They put their money on deposit with the banks- most of it is on deposit with Irish covered banks. If the banks were closed credit unions money/liquidity would be locked up and they would have to be closed as well. Few realise how close credit unions came to a crisis during the run on the Rock in 2007 during which they had quite a deal on deposit. Had that bank been shut down the resulant liquidity shock could have triggered a run on credit unions here. Funny thing is when you put say €10000 into a credit union €6000 is put on deposit by it with one of the banks - the other €4000 is lent out. In effect they act as retail deposit gatherers for the banking system - Now consider your €10000: your credit union probably pay you 0.25%-0.50% if you are lucky this year - what would a bank pay you? Credit unions are quite dysfunctional intermediaries. They can't generate safe loans so they put peoples hard earned money on deposit with the banks earning 4% and pay their savers less that 0.50%


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## Paddyman

Crugers said:


> The value of loans to Officers/Board is disclosed in the year end accounts that must be given to all members. Usually in the 'Notes' section under a heading "RELATED PARTY TRANSACTIONS".
> HTH



That is very useful to know! Many thanks!


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## kaplan

@paddyman the info is about as useful as a bucket with a hole in it. What's needed is full disclosure on all loans, by category (type and size) setting out incurred and anticipated bad debt provisions, both specific and general provisions along with write downs and anticipated write downs. The info should also include rescheduled loans and attaching bad debt provisions. Transparency will expose just how bad things are and will become. Right now credit unions and their trade body ILCU are hiding behind accounting standards designed on the [broken link removed]- keep your members in the dark and feed them a diet of rhetoric.

Kaplan [broken link removed]


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## Complainer

News from Newbridge;


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## kaplan

*Newbridge Credit Union leads the way?*

Should people be concerned about their credit unions? 

It appears so if results from Newbridge Credit Union are indicative of others to come this year. 

And it seems credit union bad debt problems are getting far worse if recent media reports and strident warnings from the Central Bank are anything to go by. 

Typically less than 3% of members bother attending their credit union AGM. If they believe the financial stablity and future of their credit union is important then maybe more should attend and start asking really hard questions of boards and management's past performance and ability to deal with the outcome of what in many cases was quite reckless lending during the boom.


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## theresa1

[broken link removed]


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## Cashflow999

*Not all doom and gloom!*

I too was a member of the Economic Doom-and-Gloom Club, until while driving to work yesterday morning my car radio began blasting out “The Credit Union Anthem” by The Creditnotes. I checked the song out later, and found it both on YouTube and iTunes. It leaves you in no doubt as to where to put your money!


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## RichInSpirit

*My own credit union*

I was reading the accounts thing for the agm from my own credit union last night. 
They appear to have made a loss for the year, but a large figure in that loss is a write down on a bond from an Irish bank. Which I assume is as a result of 'burning the bondholders ' . 
Also their overall value hasn't decreased that much, but the amount of money out on loan has decreased a huge amount. With a small write off for 2010 and no write offs for 2011 it looks like people are paying back their loans nearly too quick, or else the loans being given out has drastically reduced. 
The reducing loan book may be as much of a problem in the future as too big a loan book, in my opinion. 
In my opinion credit unions may be getting over regulated and regulated to death at the moment.


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## ClubMan

Wow! 

[broken link removed]



> Mr Charleton will be paid €423 an hour, while his assistants will be paid remuneration ranging from €150 to €423 an hour.


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## ontour

I wonder of Mr Charleton is being paid €423 per hour or is it E&Y who are paid this rate?  Also would be interesting to know who picks up this bill as it is conceivable that another 30 or 40 credit unions may warrant this course of action.


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## Fiskar

RichInSpirit said:


> I was reading the accounts thing for the agm from my own credit union last night.
> They appear to have made a loss for the year, but a large figure in that loss is a write down on a bond from an Irish bank. Which I assume is as a result of 'burning the bondholders ' .
> Also their overall value hasn't decreased that much, but the amount of money out on loan has decreased a huge amount. With a small write off for 2010 and no write offs for 2011 it looks like people are paying back their loans nearly too quick, or else the loans being given out has drastically reduced.
> The reducing loan book may be as much of a problem in the future as too big a loan book, in my opinion.
> In my opinion credit unions may be getting over regulated and regulated to death at the moment.


 
Credit unions are regulated in as much as any other institution authorised by the Central Bank. Their risk profile is managed in accordance with certain criteria. Most operate within the risk profile, some are on a watch list and a few out of the 550 approx credit unions in the country are high risk because of their activities.
I for one would much perfer to know my credit union is safe and being monitored. Some had very loose lending criteria.

this article is interesting

http://www.centralbank.ie/press-are...itunionstothecreditunionregulatoryforums.aspx


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