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OAG, credit union working to disburse withdrawals equitably
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Posted on Jun 08 2012
There has been growing concern about the Commonwealth Government Employees Credit Union’s ability to pay out member withdrawals. The delay is a result of two recent and unexpected events. The Office of the Attorney General and the credit union are working to resolve all issues and will seek to disburse funds in a manner that provides equitable treatment of all members.
First, the credit union’s last serving board member resigned last week, leaving it unable to obtain signatures required to process member withdrawals. The governor has recruited sufficient individuals to serve on the board and expects their appointments will be finalized within a few days.
Second, the credit union has experienced an unprecedented amount of member withdrawals. It was in default on its $2 million loan from the Retirement Fund. Although the parties were actively discussing a mutually beneficial plan to cure any defaults outside of court, the Retirement Fund recently filed an adversary proceeding in its bankruptcy to recover the loan balance.
Understandably, the Retirement Fund’s filing caused credit union members to be concerned about their deposit accounts. This led to mass withdrawals over the last few days and many more are anticipated in the near future. Such mass withdrawal would cause a disruption to any credit union, as it is not a part of a financial institution’s regular operation. Careful planning is necessary to ensure all withdrawals are timely and equitably honored. Specifically, the credit union wants to avoid paying some members immediately at the expense and to the prejudice of other members. Many options are being considered at this time, such as payment of withdrawals in pro rata installments.
The Office of the Attorney General is working with the government and the credit union to resolve these issues with member withdrawals in a timely and efficient manner. The main concern of all agencies involved is that all member withdrawal requests are paid fairly and systematically. (Office of the Attorney General)
