The ice road, which is the credit union financial safety, came close to cracking during the Northern Rock crisis.
News that Irish credit unions had at least €100m on deposit with Northern Rock has only now been commented on in the media: http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=MARKETS-qqqm=nav-qqqid=27170-qqqx=1.asp
The response to media enquiries of the ILCU was once again quite telling. It downplayed the serious exposure, with its spokesman highlighting how small the deposits were in comparison to overall credit union counter party risks. Of course this would be expected of the ILCU as a stabilisation provider, which should have been acutely aware of the serious risks posed to credit unions and its stabilisation fund. But then again it would not be suprising to find it wasn't aware of the risks. Its guesstimate response to media enquiries ie "somewhere between €90m and €100m" demonstrates it may not have known what the true exposure was, save exposure through its central investment facility
How many credit union directors and boards were aware of the risks at time is another question to ponder. The suspicion is few would have been aware of the potential consequences to their crediit unions.
Analysis of one credit union (Tralee Credit Union) shows that its exposure may have been c15% of its investments. This means that the credit union sector may have had an exposure of up to €1bn to Northern Rock. This would be unusual but the figure was most certainly was well in excess of the ILCU guesstimate of €100m. http://www.traleecu.ie/index.php?option=com_content&task=view&id=48&Itemid=90
Imagine the consequences had the Irish public become aware of the scale of credit union exposure to Northern Rock during its crisis. Imagine if the UK authorities had not provided the UK government guarantee.
Just how thin was the ice that credit unions drove over at this time ?
If credit union boards, their trade bodies, government and regulator were not aware, they should be now more than aware now.
It is a fact that there are no statutory intervention mechanims available to the Irish government to intervene in a credit union crisis. Maybe the thin ice will finally focus minds on ensuring a proper financial safety net is established.
Many have not missed the irony of the UK government providing a deposit guarantee to the Irish credit union sector whilst the Irish government was caught skating on very thin ice indeed in not providing for any guarantee at all to Irish credit union savers.
News that Irish credit unions had at least €100m on deposit with Northern Rock has only now been commented on in the media: http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=MARKETS-qqqm=nav-qqqid=27170-qqqx=1.asp
The response to media enquiries of the ILCU was once again quite telling. It downplayed the serious exposure, with its spokesman highlighting how small the deposits were in comparison to overall credit union counter party risks. Of course this would be expected of the ILCU as a stabilisation provider, which should have been acutely aware of the serious risks posed to credit unions and its stabilisation fund. But then again it would not be suprising to find it wasn't aware of the risks. Its guesstimate response to media enquiries ie "somewhere between €90m and €100m" demonstrates it may not have known what the true exposure was, save exposure through its central investment facility
How many credit union directors and boards were aware of the risks at time is another question to ponder. The suspicion is few would have been aware of the potential consequences to their crediit unions.
Analysis of one credit union (Tralee Credit Union) shows that its exposure may have been c15% of its investments. This means that the credit union sector may have had an exposure of up to €1bn to Northern Rock. This would be unusual but the figure was most certainly was well in excess of the ILCU guesstimate of €100m. http://www.traleecu.ie/index.php?option=com_content&task=view&id=48&Itemid=90
Imagine the consequences had the Irish public become aware of the scale of credit union exposure to Northern Rock during its crisis. Imagine if the UK authorities had not provided the UK government guarantee.
Just how thin was the ice that credit unions drove over at this time ?
If credit union boards, their trade bodies, government and regulator were not aware, they should be now more than aware now.
It is a fact that there are no statutory intervention mechanims available to the Irish government to intervene in a credit union crisis. Maybe the thin ice will finally focus minds on ensuring a proper financial safety net is established.
Many have not missed the irony of the UK government providing a deposit guarantee to the Irish credit union sector whilst the Irish government was caught skating on very thin ice indeed in not providing for any guarantee at all to Irish credit union savers.
0 comments:
Post a Comment