Credit Union ordered to halt lending

[The Dude]

ONE of the country’s biggest credit unions, with 17,000 members and assets of €100 million, has been told by the Financial Regulator that its "financial stability" is under threat and has ordered it to cease all business lending.

The Financial Regulator’s Registrar of Credit Unions, Brendan Logue, in a private and confidential letter to the board of Mitchelstown credit union, warned: "A run on members’ savings took place last year and it is clear that the credit union would have difficulty surviving a repeat of this. You advised us that no contingency plan exists to deal with any of the potential threats to the credit union and this is a matter of great concern."

Credit union ordered to halt lending | Irish Examiner

This will have come as absolutely no surprise to anyone who has followed coverage of the goings on at Mitchelstown Credit Union in the local media.

The irony is that reporting that the CU there won't be able to cope with another run on accounts will today spur just that. It was foolish of the board not to comment on the story - aren't savings at the CU guaranteed?

[GJG]

There are some credit unions like Mitchelstown whose risk profile is higher than the average. However, these are fewer than 10 in number, out of a total of 419 in the Republic of Ireland. Consequently members should have no reason to be concerned about the safety and security of their savings or about the solvency or liquidity of their credit unions.

So let's get this straight, 10 CUs out of 419 have a risk profile that is higher than average... so 409 have a risk profile lower than average, is that right?

With maths skills like that I hope these guys aren't... oh sh1t!

[Skin]

So let's get this straight, 10 CUs out of 419 have a risk profile that is higher than average... so 409 have a risk profile lower than average, is that right?

With maths skills like that I hope these guys aren't... oh sh1t!

Yes, but if you understood your own added link you should have spotted the anomoly in this statement of "...higher than average"

The real question is how high is the risk profile of all the CU's?

If they are all currently high risk (Im not saying they are, but it needs to be clarified), then having 10 CU's having higher than the average risk profile (which could be high) would be a serious casue for concern.

So we need to find out what is the average risk profile, is it high risk or low risk?

[Vega1447]

So let's get this straight, 10 CUs out of 419 have a risk profile that is higher than average... so 409 have a risk profile lower than average, is that right?

With maths skills like that I hope these guys aren't... oh sh1t!

Trouble is: what do they mean by average?

There are different definitions; mean, median and mode.

It is (deliberately) not clear what

10 CUs out of 419 have a risk profile that is higher than average...

means.


I remember once saying to someone that almost 50% of Irish kids are of below average intelligence.

She was horrified!

[ivnryn]

Trouble is: what do they mean by average?

There are different definitions; mean, median and mode.

Well 'average' is usually used to mean mean.

Also, by definition, 50% of any set is greater or equal to its median and mode makes no sense when considering real numbers (i.e. the odds of the risk for two CUs being the same is almost zero).

[onthefence]

Credit union ordered to halt lending | Irish Examiner

This will have come as absolutely no surprise to anyone who has followed coverage of the goings on at Mitchelstown Credit Union in the local media.

The irony is that reporting that the CU there won't be able to cope with another run on accounts will today spur just that. It was foolish of the board not to comment on the story - aren't savings at the CU guaranteed?

Any chance you could tell us non locals what the local media is reporting?

[EoinMn]

aren't savings at the CU guaranteed?

Guaranteed by the state, up to €100,000.

[Vega1447]

Well 'average' is usually used to mean mean.

Also, by definition, 50% of any set is greater or equal to its median and mode makes no sense when considering real numbers (i.e. the odds of the risk for two CUs being the same is almost zero).

That was my point in the "50% of all X are below average" story....

[Seos]

So let's get this straight, 10 CUs out of 419 have a risk profile that is higher than average... so 409 have a risk profile lower than average, is that right?

With maths skills like that I hope these guys aren't... oh sh1t!

It's quite possible for only 10 to be above average.

Simple example:
We have the following 10 numbers: 5, 5, 5, 5, 5, 5, 5, 5, 5, 6.
So their mean is 5+5+5+5+5+5+5+5+5+6= 51/10= 5.1

so here only one out of the 10 is above average.

[Ah Well]

Guaranteed by the state, up to €100,000.

Pretty obvious comment to make but ... this "Guarantee", is fine if finances will exist to honour such a Guarantee in the event of it being called into play ... if there's a major collapse with a number of Lenders, be they Banks or Building Societies, or Credit Unions or whatever and that is by no means an impossibility, how long will it actually be possible to keep this Guarantee running before coffers are empty and the Gov have to renage on it? You'd almost be better off having your nest egg in one of the dodgiest operations at the mo so as to get first call on this Guarantee for cashback. It might be a case of "last in" sorry no funds and don't forget to turn off the light.

Someone asked me yesterday whether they should shift their cash to the Credit Union instead - guess this answers their query definitively.