Kansas City is at the epicenter of one shock wave in the financial crisis — credit unions.
The industry already faces a tough year because of the deepening recession. Now, credit unions nationwide face an extra burden to help shore up Lenexa-based U.S. Central Credit Union.
Dramatic declines in the value of mortgage-backed securities bought by U.S. Central have left the industry behemoth owing others more than its own assets are worth.
U.S. Central’s deficit, which exceeds $5 billion, helped trigger a $4.7 billion assessment against the country’s 8,400 credit unions, from the billion-dollar giants to the throng of one- and two-employee shops.
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Collectively, the added financial load dwarfs the entire industry’s profit last year. Only one in six Kansas City-area credit unions, which serve nearly 500,000 members, earned enough last year to cover its coming bill.
Still, each credit union, profitable or not, has to pay, even if it means dipping into its own capital to do so.
Read the complete story at kansascity.com