Bank regulators, the media, and community groups repeatedly taught credit unions as the poster children for offering payday loan alternatives. One credit union specializing in such loans has come upon tough times. On February 19, 2007, the NCUA announced that Kansas-based Communities United Credit Union was placed into conservatorship. The CU had negative net worth and was losing money thanks to significant defaults on its car title and payday loan alternatives portfolio.
Coverage:
http://www.cuna.org/newsnow/printer_version.php?story_id=30166
http://wichita.bizjournals.com/wichita/stories/2007/02/05/daily26.html
http://www2.ljworld.com/news/2007/feb/18/insolvent_credit_union_be_dissolved/?state_regional
Sunday, April 15, 2007
Kansas Credit Union Specializing in Payday Loan Alternatives Closed by NCUA
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This reminds me of another credit union program recently heralded as a success in Pennsylvania. A new credit union product being touted as a "Better Choice" than payday loans. Turns out the program may work only because it's being supported by $20 million in funds from the Pennsylvania Treasury Dept. Now taxpayers are subsidizing payday loan alternatives?
www.pcua.coop/media/2006archives/CUBetterChoice.doc
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