Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 09-11-2010, 09:45 AM   #41
Full time employment: Posting here.
Join Date: Feb 2009
Posts: 886
My question is how they can make money at those rates. I once was involved in an NCUA insurance case (long ago) and I was not impressed with the level of financial regulation. Exactly how are they making money paying 5% ?
Loan Growth Falls To Historic Lows

Credit Union Journal Daily Briefing | Wednesday, September 8, 2010

WASHINGTON – Credit union lending has all but dried up, even with interest rates plunging to new lows, leaving new challenges for credit unions to attract borrowers.
Monthly data complied by CUNA from almost 500 credit unions showed total credit union loans declined by 0.1% during July, and have declined by almost 1% for the first seven months of the year.
That’s the first time in almost 30 years credit unions have had negative loan growth through the first seven months of a year, according to Bill Hampel, chief economist for CUNA, who predicted the weakest year for loan growth since World War Two. “That’s why this recovery is so weak,” said Hampel.
The CUNA economist attributed the continued lack of loan demand to the efforts by consumers to pay down debt. “For the past 15 years the household sector has increased its debt faster than it has increased its income,” he said. “What we’re seeing now is a de-leveraging of the household sector.”
Tun Wai, chief economist for NAFCU, said the enduring recession has had pushed down demand, even for borrowers who have not lost their jobs. “If you are employed and you are really concerned about the future you don’t spend and you’re really trying to pay down your debt,” he said.
“I think there is going to be rather slow loan growth for quite some time,” Wai told Credit Union Journal yesterday.
NCUA figures for the first six months of the year, which were released last week, show loan growth for the first half at a meager 0.1%, with the fastest-growing types of loans being those with members seeking lower payments and less collateral.
New auto loans, for example, fell by 4.2% in the first quarter and by another 5.7% in the second quarter – almost 10% for the first half of the year. Credit card loans were down almost 0.6% for the first half, while first mortgages – fueled by decades-low rates – were up only 1.2% for the first half of the year.
The slack loan demand creates a major dilemma for credit unions who now have cash to lend but few takers, according to NAFCU’s Wai. “The question is, what are you going to do with it? Some credit unions are probably holding on to it as cash,” he said.
Both CUNA and NCUA figures also show a big drop in share growth. NCUA said share growth slowed from 11% annualized for the first quarter to just 0.6% in the second quarter. CUNA’s figures show shares grew by just 4.17% for the first seven months, half of the 8.73% growth rate for the same period last year.

I am afraind that someone is stoking a balace sheet with taxpayer taking the risk

Emeritus is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-11-2010, 10:09 AM   #42
Recycles dryer sheets
Join Date: Jan 2008
Posts: 194
Originally Posted by Emeritus View Post
My question is how they can make money at those rates. Exactly how are they making money paying 5% ?
I wondered this 7-8 years ago when I bought my first CD's at PenFed.(At 5.25%)

My guess was and still is that they make enough loans at 8.99% to make money on the 5% CD's.
They make boat, cycle, personal, and consolidation loans at around that 9% mark, along with credit cards at higher rates.They have a lot of service person clients, who need these kind of loans. I have watched the rating on PenFed, along with reading financial reports, which I don't profess to be an expert at, and feel safe with my money. I do keep my $ amounts below the insurance level, for the most part.(A tiny part of SO's IRA will be over in a year for a year or so)

Dave J is online now   Reply With Quote
Old 09-11-2010, 01:32 PM   #43
Full time employment: Posting here.
Join Date: Feb 2009
Posts: 886
But why pay 5% for money with 100% treasury guarantees? If you have a genuine retail franchise you go to some major player and borrow milllions at 3-3.5 %
Emeritus is offline   Reply With Quote
Old 09-11-2010, 01:40 PM   #44
Recycles dryer sheets
Join Date: Jan 2008
Posts: 194
Don't they require you ( A bank or CU)to have so much core deposits?
Dave J is online now   Reply With Quote
Old 09-11-2010, 01:53 PM   #45
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 39,202
This question (how can PenFed offer these rates) was discussed a few days ago on this thread: Purchasing SPIA through Fidelity

Brewer's post (#25) offers a reasonable explanation...

Numbers is hard.

Retired in 2005 at age 58, no pension

REWahoo is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
2 years to FIRE; Worried about being passed over for promo! msbearkeley Young Dreamers 13 05-04-2010 10:08 AM
Eliot Spitzer Night-Macon Ga Baseball Promo poboy Other topics 5 03-17-2008 06:32 PM
Marketing promo goes boom VoyT Other topics 3 04-30-2006 09:26 AM
$500 promo from TD Ameritrade lazyday FIRE and Money 3 04-27-2006 01:53 PM
SWBDX and the like vs. CD's oldcrowcall FIRE and Money 1 01-29-2006 01:48 PM


All times are GMT -6. The time now is 04:03 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.