Nevada's top credit union regulator, George Burns, taking note of the state's grim economic picture, disclosed that his office has issued "letters of understanding and informal cease and desist orders" to unidentified credit unions to bring them into balance sheet compliance.
Declining to name the number or location of any of the troubled CUs, Burns reiterated the negative view shared by many in and outside of Nevada of poor conditions impacting CUs as the state undergoes a continued high rate of foreclosures, falling home prices and 13% unemployment.
Burns, who is commissioner of the Nevada Department of Financial Institutions overseeing both banks and CUs, said one hard hit area remains indirect auto loans, witnessing what he said are overextensions and "a 50-75% decline in CUDL business over the last four to six months by some credit unions." That was a reference to Credit Union Direct Lending Corp., of California the CU-owned point-of-sale network.
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"We are ground zero in the nation for mortgage foreclosures with the highest in the nation and with 13% unemployment that has all spilled over into other areas," impacting both CUs and banks, said Burns. Commercial lending "has also taken a nosedive" in Nevada worsening conditions further, he said.
The closure of many GM and Chrysler dealerships has played havoc with financial institution lending and so it is safe to say "they are severely challenged," said Burns whose office supervises 11 state-chartered CUs, of which all but three are privately insured.
Through the letters of understanding and desist orders, his office "is trying to give credit unions a road map" to follow to restore balance sheet performance, he concluded.
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