Credit unions row on bailout fund
Published 17/09/2010 | 05:00
A CREDIT union body has supported moves to have a statutory fund put in place to bail out distressed credit unions.
The Credit Union Development Association (CUDA), which is a rival to the League of Credit Unions, is backing moves by the regulator to have a statutory fund. The league is opposing the regulator's moves.
CUDA chief executive Kevin Johnson said there was a need for a statutory stabilisation mechanism under the control of the Central Bank.
In June, registrar for credit unions James O'Brien issued a consultation paper proposing a statutory bailout fund for credit unions that become insolvent.
Mr O'Brien outlined a number of options for the fund but is understood to favour having a statutory fund that replaces the league's existing €119m savings protection scheme (SPS), which is a private fund outside the control of the registrar.
But proposals put forward by Mr O'Brien have been rejected by the Irish League of Credit Unions, which wants to retain full ownership and control of any new scheme.
More than 1,000 delegates are expected to attend a special general meeting on Saturday to discuss moves to ensure that the league retains control of the SPS fund.
But CUDA has backed the registrar and come out against the league position.
The league is battling to retain control of the €119m fund which it owns. This has been put in place to bail out credit unions in financial difficulty.
But CUDA argues that this fund is not available to credit unions which are not members of the league.