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Old 07-16-2008, 02:49 PM   #86
Recycles dryer sheets
Join Date: Jan 2007
Posts: 85
Originally Posted by ChrisC View Post
If OhSoClose works for NCUA, as he claimed, or the credit union in which this occurred, his disclosure of this information might be contrary to the Federal Privacy Act or the Bank Privacy Act, unless this information is readily available to the public. His basic point was a particular charitable or religious organization had uninsured accounts at a credit union; this is not surprising. At IndyMac, the FDIC press release says it projects around $1 billion in uninsured accounts -- these can just all be individuals but likely include nonprofits like Churches, Social and Fraternal Organizations, Municipalities/Political Subdivisions, Homeowners Associations, Trust and Escrow Accounts (like Lawyer IOLTA/Client Accounts), etc.

Google Freedom National Bank, a small bank in Harlem founded by Jackie Robinson that failed in the 1990's, and you will note the uproar that ensued when a number of charitable organizations, including Churches, had accounts that were uninsured and unprotected when that bank failed. The treatment of uninsured depositors of Freedom National Bank, when contrasted with the treatment of uninsured depositors at Bank of New England (where uninsured depositors were fully protected), lead Congress to enact changes in how "uninsured depositors" get treated in all banks, including those that are "too big too fail." In the past, uninsured depositors in mega-banks would routinely be protected in deals structured by the FDIC when those banks were resolved by the FDIC -- not the case anymore, as IndyMac also demonstrates.
The "nun" case I made reference to happened long ago. But ChrisC is right, the information OAG wants is not publicly available. The religious organization could have made its claim public by filing a lawsuit against NCUA after NCUA denied the insruance claim, but it chose not to file a lawsuit. The important point is that folks who run organizations seem to be the most likely to overlook the limits of federal insurance and to put huge deposits at risk, and that is particularly unfortunate when the organization is a charity or nonprofit

fyi, Chris, NCUA does not have the authority to establish "bridge" credit unions, so the IndyMac recievership is proceeding along a different tack than would a similar credit union failure.
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