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Kai Ryssdal: So here's a problem you don't run across too often: A business having too much money. That was the unusual message that went out just before Thanksgiving from a financial institution that serves members of the two biggest actors' unions. That would be the American Federation of Television and Radio Artists and the Screen Actors Guild. The AFTRA-SAG Federal Credit Union sent a letter to people with large accounts suggesting they consider putting their money somewhere else. Because, the credit union says, "it's flooded with cash."
Our senior business correspondent Bob Moon explains how that might add up to trouble.
Bob Moon:The credit union's website says it manages more $200 million in assets. And like most credit unions, it pays a little more interest on those deposits than banks do. Lately though, generating those returns hasn't been easy --
especially since the money earned lending to customers has largely dried up.
Earlier this year, a credit union in Nevada actually started paying its depositors a bonus for withdrawing funds. Bill Hampel is chief economist for the Credit Union National Association.
Bill Hampel: In normal times what they would do is, they would just take the funds that were not being loaned out and invest them. But right now, interest rates on short-term investments are essentially very close to zero, so there's not much they can do with the money.
Hampel concedes urging members to withdraw money is unusual. The normal approach is lowering interest rates to discourage customers from depositing too much.
Industry consultant Bert Ely thinks the "take your money elsewhere" request was made to stay competitive against rival banks.
Bert Ely: They apparently have aimed this letter at certain depositors who have high balances. And so, by encouraging some people to pull their money out, that would enable the credit union to continue to pay higher interest rates than banks pay.
The credit unions complain federal rules allow banks to go after business customers, but limit that option to a small slice of a credit union's assets. Again, the industry's Bill Hampel.
Hampel: We feel that we should be allowed to have something more than 12 percent of our assets in business loans. And the bankers would prefer that we stay at this limit, even if some of them are unable to meet all of their small-business loan demands.
Hampel says tighter lending standards mean fewer consumers qualify for loans -- and those who do are reluctant to borrow in these lean times.
I'm Bob Moon for Marketplace.