Mid-Atlantic Corporate Federal Credit Union sees ratings lowered

A Dauphin County nonprofit that provides key services to
credit unions saw some of its financial ratings lowered, reflecting the impact
of the financial crisis on the credit union system.

Fitch Ratings yesterday announced it
would lower the ratings on Mid-Atlantic Corporate Credit Union and similar
institutions around the country.

Mid-Atlantic and the other corporate credit unions are a
central part of the credit union system. They provide liquidity, a role
analogous to that played by the Federal Reserve System for banks, said Michael
Wishnow, a spokesman for the Pennsylvania Credit Union Association. They also
provide a range of investment and processing services.

The corporate credit unions, in turn, receive services from
a Kansas
nonprofit called U.S. Central Federal Credit Union. Regulators scrambled to
stabilize the system after U.S. Central recently announced a big loss on
investments. Mid-Atlantic held a meeting today with representatives from its
member credit unions to provide an update on the situation.

Mid-Atlantic’s individual rating dipped from A/B to B/C, but
it’s still the highest among corporate credit unions, according to Mid-Atlantic.
The credit union’s long-term “issuer default rating” went from AA- to A , while
its short-term rating was kept at F1 .

“This change by Fitch was not unexpected given the impact of
the U.S. Central announcement, but we were pleased that the change was so
slight,” Mid-Atlantic President and Chief Executive Officer Jay Murray said in
a statement. “We believe this reflects the fundamental soundness of
Mid-Atlantic and our conservative investment philosophy.”

U.S. Central is receiving a $1 billion infusion from the
credit unions’ share insurance fund, similar to the Federal Deposit Insurance
Corp. for banks. The fund is to be replenished by assessments on credit unions.

“The credit union system is doing extremely well as a whole
but … we’re not immune to the problems in the financial marketplace,” Wishnow
said. “And the credit union system has the wherewithal to fix itself without a
taxpayer bailout.”