SECU Making The News -Telling the Truth?

... about that little $5 billion loan.

😎 Sorry, need to flog this dead horse one last time! [link to prior post]

As the article in BusinessNC explains [see here], the Federal Reserve created the Bank Term Lending Program in March, 2023 to provide short-term "liquidity" to financial institutions which were experiencing large withdrawals of deposits by their customers (called a "run") given the collapse of several large banks.  

The purpose of the program was to support "liquidity", not "profiteering" by banks and credit unions.  What does "liquidity" mean? What's the difference between "liquidity" and "profiteering"? Why do you suspect SECU was "profiteering"?   

In this case, a simple definition of "liquidity" means the ability of a financial institution to meet a withdrawal request. You go to a teller or an ATM and ask to withdraw $100, you expect to get it, no delay, no rigamarole.  That's called liquidity! If the teller says, sorry you'll have to wait a few days that's called "illiquidity"!  And, if told that by a teller; you, of course, change your request to "on second thought give me all my money - that's called "a run"!  The BTLP was intended to be sort of "a payday loan for the banks" (that's kinda ironic isn't it). Got it?

🐄 SECU started milking the Fed BTLP in August, 2023 for @ $1.5 billion. So, did SECU experience a member "deposit run" during the summer of 2023? Total deposits reported to the federal government at 6/30 were $45.3 billion, then total deposits by month...

August 31, 2023:  $ 45.0 billion ... borrowed $1.5 billion from Fed.

Sept. 30, 2023:     $ 44.9 billion

Oct. 31, 2023:      $ 44.7 billion

Nov. 30, 2023:     $ 45.0 billion

Dec. 31, 2023:     $ 44.9 billion  ... Fed borrowing increased to $5 billion.

Looks like deposits only changed by @ $100 million, not $ 5 billion. 

So, it doesn't appear that SECU experienced a "run" on member deposits, does it? Normal seasonal member X-mas shopping is probably a better explanation.

But, how do you know it was "profiteering"? Well, it might be risky, but I take SECU at its word. Here's the direct quote from SECU in Mr. Mildenberg's article. It's that very last line [here check it out]: 

"SECU says the Fed program enabled “additional income with which we can further benefit our members.” 

... Your honor, the defense rests.  BTW, most  SECU savings members haven't noticed any "further benefit" yet.