BECU loses millions in first quarter

April 25, 10:43 AMSeattle Personal Finance ExaminerSteve Juetten, CFP®

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Three stories about banks and credit unions emerged today.

First, close to home, Boeing Employees Credit Union, the third largest Washington-based financial institution, posted a loss of $65.7 million in the first quarter of 2009. The bulk of the loss comes from two expenses related to federal regulations to stabilize corporate credit unions that required BECU to put more money into the credit unions' deposit insurance fund. Still, without the additional money directed into the deposit insurance fund, BECU would have lost $9.3 million in the first quarter of 2009 versus a profit of $24.9 million in the first quarter of 2008.

BECU officials are quick to re-assure members that they are adequately financed. You can read the full press release here.

Second, Federal regulators on Friday shut down four more banks. That makes the tally 29 so far this year. Only 25 banks were shut down last year.

Finally, the nation's 19 largest banks had private meetings with Federal Reserve officials yesterday to learn the results of their "stress tests." A "stress test"  was done on the largest banks to see how they would fare if banks would live or die if the economy turned downward sharply. The public won't know about the results of the stress tests until next month. Be prepared for some of the banks to have failed the stress test.  If that happens, watch out for severe investment market reactions. 

These three reports raise two questions for you.

1. Are your deposits in BECU and any other financial institution safe? The answer is yes, as long your deposit is less than $250,000 in 2009. Credit unions and banks have federal insurance that protects your deposits up to this amount, but the limit is scheduled to reset to $100,000 by the end of the year.

2. Who's responsible for your savings and investments? You are. Not BECU, which projects a homey, community, neighborhood, "we're on your side" image and certainly not one of the big banks. The Federal and State governments aren't responsible for your money either. Only you are responsible for your money and your investments so you owe it to yourself to take every precaution  you can to protect your hard-earned savings. Don't believe the marketing hype and don't believe the liars, cheats, criminals and scoundrels at financial institutions.

How do you protect yourself and your money?

1. If you're a BECU member (or any credit union), read every quarterly financial report and ask questions. If you don't understand something, ask someone at the credit union. 
2. Make sure your accounts are under the Federal insurance limits. If you're not sure, ask your banker or credit union rep.
3. Look at your brokerage, 401(k) and 403(b) account statements at least quarterly. Make sure you're getting them fairly soon after the end of the month or quarter (usually by the 15th of the month after). Scrutinize the transactions and make sure your employer is making deposits on your behalf in the right amounts and on time. If something doesn't look right, ask HR or whoever is in charge of the plan at your employer.

These are tough times for financial institutions as shown by the disappointing loss at BECU. We're not out of the financial mess we've all dug ourselves into so remember the first rule of Warren Buffet -- first, don't lose anymore.