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Data strife at credit union sets dubious example

Rachel Wheeler Archive
Small financial institutions are in constant danger. While large banks are somewhat insulated from failure by their size, a few problems at a credit union can lead to a complete closure. In this climate, it is important for officials to take all available precautions and employ the best systems to handle variables such as data quality.

A recent All Alabama report highlighted how close credit unions are to failure. The source charted the demise of a local bank, open since 1956, in the face of poor management and large-scale loan defaults. Two loans led to the bank's failure, with money owed totaling twice the firm's assets.

One of the many problems rampant at the credit union, according to the source, was a lack of data quality. Federal investigators found that the bank did not have an accurate view of its own records and repeatedly failed to deliver required financial reports on time.

The Wall Street Journal recently explained some of the difficulties facing small banks in the current market climate. The source stated that 29 financial institutions have been forced to close in the U.S. so far this year. An additional 180 have been absorbed into other entities.