Who Is Safe and Strong?

People are beginning to pull their money from the likes of Washington Mutual and Wells Fargo. They want to put it in a safe place, and asking where are the safe places. I get asked are credit unions are safe; NO. So, who is safe and strong? The answer is simple, no bank is safe, no bank is strong, no bank is solvent. Under a fractional reserve banking system, the minute a bank opens its doors its reserves of its lending ability or leverage. So, if everyone came in to withdraw their money at the same time, the bank wouldn't have the reserves to cover it. That's not illiquid it's insolvent and that's what's happening now to Washington Mutual. The point is that banks lending ability is based on its on hand

Patelco Continues Safe and Strong

Everyone could use a little reassurance from time to time, and with the abundance of recent negative press involving the banking and insurance industry, now is a good time to assure you that Patelco is weathering this financial storm with complete confidence and control. Your deposits are safe, your loans are safe, and our membership base has increased substantially this year, making Patelco's future even more secure.

If they have complete confidence in think they are in complete control, In either they don't understand the problem, where they are lying. I hope they are just lying.


Take a look at Patelco's numbers as of June 30, 2008:

Members: over 250,000

Who cares? Deposits on hand matter not how many members.

Assets: over $4.2 billion

Meaningless unless compared to liabilities

Capital: over $400 million

Again, liabilities?

Share Insurance: up to $100,000 for Deposit Accounts and up to $250,000 for IRAs by the National Credit Union Administration, backed by the full faith and credit of the United States government.

We no longer have full faith in the federal government these days. And for good reason. there Is no FDIC insurance fund. The government collects the money from the banks of puts you into the general coffers to buy bombs and everything else. The FDIC, fictional fund cannot protect all the real assets and every day that goes by, bleeds out fun dryer and dryer. Let's see who collapses over this weekend.

As troubling as today's economic news may be, we'd like to provide our members with further reassurance that credit unions, by law and regulation, are not allowed to participate in the sophisticated financial transactions that have troubled financial institutions such as Lehman Brothers and AIG. Patelco Credit Union and other federally insured credit unions have not and cannot participate in credit default swaps or collateralized debt obligations, and Patelco Credit Union has extremely limited exposure to both Lehman Brothers and AIG.

Blatant violations of federal regulations that so far gone unpunished are a major contributor to the present crisis. In fact, crisis shows that federal regulations are meaningless.

Further, Patelco is just like everyone else, they have no way of knowing what they are exposed to. That was the whole scam to begin with, to stir the bad loans in the muddy waters so no one could see what was down there. It worked!

Have we been affected by the nation's financial woes? Sure. Housing prices have gone down while gasoline prices continue to go up, which inevitably makes it harder for some of our members to repay their loans. But these economic downturns are a fact of life, and foresight on Patelco's part (like not getting involved in the sub-prime mortgage mess) means that this too shall pass.


It will pass, but will Patelco pass before or after the housing crisis?

As another sign of our continued strength, Patelco just acquired two credit unions, Sterlent and Cal State 9, after both became insolvent. Rather than be alarmed that this could happen to Patelco, you should be reassured by the fact that Federal and state regulators would not have approved these transactions if Patelco was not capable of taking care of the additional members while also remaining strong.

Absolutely wrong! Federal regulators especially put enormous pressure on Bank of America to swallow, Countrywide Financial and Merrill Lynch. The fact that federal regulators chose them, says nothing about their solvency. However, I would bet that they were stronger before being force-fed Sterlent and Cal State 9 than after.

The story of IndyMac, Bear Stearns, AIG, Lehman Brothers and other financial institutions that have faltered will not be Patelco's story; not with the dedication of our members and the resolve of our highly qualified team.


Some will and some won't, the point is, without knowing where the bad paper lies. No one can tell, who will or who won't.


I hope everyone is out of the likes of Washington Mutual or Wells Fargo. But a national for global economic freeze up is extremely likely meaning all the banks will be closed for at least some period of time. So, just as important as what bank you use is how you use it. If you direct deposit into the bank, then schedule bill payments immediately and get the remaining cash into your pockets. Go down there and physically withdraw the money after all the bills have been paid. This may be inconvenient, but so is starvation. In my opinion, the best bank is no bank at all.