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FDIC Runs Low: Credit unions unaffected

The other day Finance Junkie picked up on an AP article to the effect that the FDIC is running low on funds. This creepy little gem of news is not as drastic as it sounds at first blush: the agency still has $45.2 billion dollars on hand, plus it has a $30 billion line of credit with the Treasury. But the fact that 117 banks with assets of $78 billion were struggling in the second quarter isn’t reassuring.

One of my RAs heard this news, too, and wondered if she should take her savings out of the bank. I advised her not to do so, but suggested if she was really worried, she could move her money to the credit union, which has a branch on the campus and which accepts students in the state university system. Credit unions are federally insured, too, but by a different entity, the National Credit Union Share Insurance Fund (NCUSIF). Like the FDIC, the NCUSIF insures your deposits in a single institution up to a maximum of $100,000, andit also covers an IRA held at a credit union up to $250,000.

A friend who works as a loan officer at the Arizona State Credit Union had this to say:

I know there is a lot of uncertainty regarding banks right now. However, I have not heard of any concerns regarding the FDIC and their ability to insure funds. The credit union has been fortunate that we are not dealing with the issues and concerns that the banks are having right now. We are solid. As you may remember, we just started really bringing on mortgage products about 3 years ago and we never did any loans that were interest only ARMS, stated income or any of the other “high risk” exotic mortgages that have caused this meltdown.

Unless things get a lot worse, your money’s safe in the bank. And if it’s not…well, then we’ve got bigger things to worry about.