OMAHA – Over the course of more than 70 years, Creighton Federal Credit Union grew to have several branches and almost 10,000 members. It also got five-star reviews.
Then, in August, it merged with Cobalt Federal Credit Union. On its website, Cobalt Federal Credit Union says that the merger happened because the president of Creighton Federal Credit Union retired.
But two people who used to work for the government in banking say there is more to the story.
Aaron Klein, who used to be an assistant secretary of the U.S. Treasury and now works as a banking watchdog for the Brookings Institution, said, “This feels like a shotgun wedding.”
Klein thinks that the National Credit Union Administration (NCUA) planned the merger. He looked at the last two financial reports that Creighton Federal Credit Union had sent in.
“The bank had $6 million in capital in April, but now they are $7 million short, and there is a line in their books that says $12.5 million was “lost miscellaneous,”” Klein said. “That is 12.5 million, and it is called “miscellaneous non-interest expense” in the books.”
Here’s a line from the report that shows Creighton Federal Credit Union is more than $13.5 million in debt. This was written around the time of the merger.
It looks like the losses happened before they were paid for by Cobalt Federal Credit Union. That is right, Creighton Federal Credit Union is a separate organization from Creighton University.
One more bank watchdog, Chip Filson, who used to be a program director for the NCUA, said, “They have not said where the money went.”
Filson says the government needs to explain Creighton Federal Credit Union’s most recent bottom line.
“In 90 days, how do you lose 20% of the value of an institution?” It was Filson. It is almost $13.6 million in member money in this case. People in the group own this money. Why does not that explanation get given? What is being done to find the $13 million that was lost?
In its call report from last spring, the NCUA said that Creighton Federal Credit Union was “well capitalized.” After 90 days, the next report said that the bank was “critically undercapitalized.”
Filson said, “The banking regulator is in charge of making sure that members get information.”
Klein agrees.
Klein said that members of the Creighton Federal Credit Union should know what happened to their money that they put into the credit union.
Customers never lost money in their federally insured accounts at Creighton Federal Credit Union, but Klein and Filson both say that members should be told why their bank failed.