Tuesday, December 1, 2009

Velocity Credit Union and Private Insurance

So, I go to do a deposit today at my credit union, Velocity, and they ask me to vote on something. Seriously, that's how it came across at first. My first thought was, whoa, okay, this feels scammy...

So I asked if, instead of voting, I could get some sort of information on exactly what I'm voting on. As I'm doing this, I'm noticing two vehicles pull away, having put their "ballots" into a bag being held by one of the credit union reps. It's obvious that not everyone is asking for more information. Yay, sheep.

Anyway, Velocity Credit Union in Austin is attempting to switch to a private insurance company, away from the NCUA (which is basically the FDIC for credit unions).

The first thing I did is look over the literature that Velocity gave me. Basically, the reason Velocity wants to switch is because they're going to have to pay NCUA a premium of $675,106 and, from the information I've gathered, this is due to other, larger credit unions having failed, making the NCUA pay out, which means their funds are not where they should be.

So, Velocity wants me to put my money at risk by not having it federally insured so that they don't have to pay their part to help the country get back on its feet. Great.

Oh, but they did mention that the board of directors voted unanimously to switch to the private insurance. Considering this would probably come directly out of their paychecks, I'm sure they did.

Included in the information was a brochure for American Share Insurance (ASI), the private company they want to switch to, which was nothing but a financial report with the words STRONG, INDEPENDENT, and RELIABLE written on the front in huge letters. Ooh, big letters, how convincing...

After doing some research on ASI, I'm none too reassured. In credit unions insured by ASI, there is absolutely nothing protecting the money should ASI go belly up.

How long do you suppose the one and only private insurer of credit unions would survive if the majority of their members were to go under? I'm thinking not long. At least with government insurance, we know that the government will make sure that we have our money...they've already done so multiple times with bank bailouts.

Those Velocity Credit Union members like me, who just have a savings and checking account, stand to gain nothing from this switch, but stand to lose everything. No thanks. I'll be voting no, and will probably be jumping ship should this get voted in.

I just hope people take the time to read and research before they vote, though going off the severe lack of information about the subject, I'm thinking people aren't.


  1. Yes!! THANK YOU! My husband and I are horrified that they are putting THEIR members at unnecessary risk. We voted NO.

  2. Good! I'm glad to see that there are other Austinites out there using their brains. I knew I lived here for a reason...lol.

    My step-daughter and I both have separate accounts, and we both voted no without a second thought. We even recently got another piece of propaganda from Velocity which, yet again, reinforced the "because our board members think it's a good idea" rationale.

  3. we voted no too. I went in today and at the brodie oaks branch, they had a table setup asking people to vote. When I told them I already voted and their nuts for changing they said, "but we'll save a lot of money by doing so". when i replied how much of that am I going to see, the just stared at me.

    I want to setup a table outside telling people to vote no. anyone want to help? If this goes thru, I definately will pull my money out.

  4. I can certainly see this from Velocity's point of view. The Obama administration is punishing all financial institutions with higher insurance premiums due to the irresponsibility of a few such as Citigroup and others. Velocity is trying to make a point to the federal government that this is clearly unfair, which it is. But then again, we have become a nation that rewards incompetence at a personal and corporate level, and punishes thrift and personal responsibilty.

  5. Do the same people who worry about Velocity having private deposit insurance, also worry that their home or car insurance is not federally insured either? Here is a good idea. Let's make the government responsible for everything. Sarcasm intended!

  6. Velocity is trying to save themselves some money at the expense of their clients' financial security. The only point they're making is "We're greedy."

    My car insurance is for a physical object. You know, the car? The credit union insurance is for money, liquid funds, intangibles once they're deposited. Call me crazy, but I'd much rather my money be insured by the people who print it than some random third party.

  7. unless ASI is paying out in gold then the dollor they will be handing out is the same dollor ncua is ... only now you have to worry about asi and any issues they may run into .... and you know what, ASI is already increasing their rates. how stupid do u feel now velocity?

    I didn't like the fact that someone with who lives check to check with $50 in their account has a vote that weighs the same as someone with $150,000 in deposits. My vote should have counted more but too many broke sheep followed the heard on this one.