Credit Unions aren’t immune

Apparently the credit crisis is claiming victims in the financial sector everywhere including this New London, CT credit union and its investment manager. Obviously, credit unions aren’t immune either.

The 82-year-old broker who handled investments for the New London Security Federal Credit Union committed suicide hours after federal regulators closed the lender.

Edwin F. Rachleff, a broker with A.G. Edwards Inc. who handled the credit union’s investments for decades, jumped from a window on the top floor of an 11-story apartment building for seniors in New London at about 6:30 p.m. on July 28, The Day newspaper said. The office of the state’s chief medical examiner told Bloomberg that it had ruled Rachleff’s death a suicide.

The credit union, chartered in 1936 and based in the Connecticut city of the same name, was placed into liquidation by the National Credit Union Administration after it determined “that the credit union is insolvent” and that it “has no prospects for restoring viable operations.”

The lender had 365 members and assets of $12.7 million at the time of closing, regulators said in a statement on their Web site. Filings show New London had total shares and deposits of $10.4 million as of March this year and that it had written only nine loans during that period.

New London was discovered to be insolvent during a routine exam, National Credit Union Administration spokeswoman Cherie Umble said. She said the organization had spent $5 million closing six credit unions in the first half of the year.

Bloomberg, 30 Jul 2008

No financial institution can be considered 100% safe.

Update 7:00PM
See NCUA press release here. Apparently this is one of several recent credit union failures. See other NCUA press releases here and here.

  1. Jeffry Pilcher says

    I don’t think this credit union’s failure is connected in any way to the subprime/credit crisis.

    With only 9 loans, it’s very unlikely.

    It’s more likely that the credit union was mismanaged. This scenario is common with credit union that have less than $20 million in assets.

  2. Edward Harrison says

    Fair enough. Point taken

    That said, this type of investment mismanagement is more likely when markets are going down as they are now due to credit market distress. We may learn the investments made were connected.

  3. W.C. Varones says

    Rachleff is number 37 in Greenspan’s Body Count.

Comments are closed.

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