NEA Credit Union Using Taxpayer Money

Mike Antonucci has the story of the NEA Employees Credit Union’s forced closure and how taxpayers will foot the bill.

The National Credit Union Administration closed down the Education Associations Federal Credit Union (EAFCU), a credit union serving employees of NEA and its affiliates, after determining it was “insolvent and had no prospect for restoring viable operations.”

Established in 1954, the credit union was not owned or operated by NEA, but it was headquartered in the NEA building in Washington DC, was run by former NEA employees, had an NEA e-mail address, and served 665 NEA and affiliate employees, retirees and their families. Financial disclosure reports indicate NEA performed some business services for EAFCU, routinely receiving a total of $50,000 to $70,000 in cost recoveries from affiliates after disbursing similar amounts to EAFCU under the category “general overhead.” On average, NEA received $3,000 to $7,000 more than it paid out each year.

It could not provide the basic services consumers expect these days, and the NCUA decided things were not going to get better. Just like banks, deposits in credit unions are insured by the federal government up to $250,000. Each EAFCU depositor will be made whole. EAFCU received a first-hand education about the failure of financial institutions, and taxpayers will help fund the lesson.