PCCU Financial enters liquidity April 30, 2009 | Your stories | Discussion forum

Something to consider. Ontario is a much, much larger province population wise and has many more deposits than all of Manitoba credit unions. So, it is relatively easy for the Manitoba government to say, "Okay, we'll guarantee all deposits, 100%." If Ontario did that, people would question it and say it's not worth the paper it is printed on. It's the same with CDIC and why we don't have unlimited deposit insurance for Canadian banks. If all the Canadian banks failed and the government had to guarantee all deposits, not only would we bankrupt the deposit insurance fund banks pay into, we'd bankrupt the country.

It's similar to B.C. recently guaranteeing all deposits. They can do that because, for the most part, our provincial credit unions are strong relative to their North American counterparts and unlikely to fail but if they were all to fail, the B.C. government would bankrupt itself and inevitably have to go begging the federal government for a bailout. That said, there have been a couple credit union failures in the past year or two - Arrow Credit Union north of Vernon was forced into a merger with VantageOne Credit Union because of a liquidity crisis and, most recently, in what was touted as a merger, Quadra Credit Union had a liquidity crisis of its own and was forced into a merger with the larger Community Savings Credit Union. In fact, a lot of these mergers sound like mergers of two strong credit unions becoming bigger but in actual fact, it's generally one strong credit union being asked by Central to pick up a struggling one, if you read the fine print of their annual reports - the same thing with VanCity picking up VanTel/Safeway, which was struggling.

Cheers,
Doug