Word: retailed
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...statement seems wishful thinking. In the third quarter, for the first time, transactions on eBay's marketplace, a key metric of growth, fell 1%, to $14.3 billion, from a year ago. The strength and popularity of Google's search, Amazon's sales and the sheer number of other Web retail sites have eroded eBay's dominance, making it harder to compete with the same business model that steered the firm through its first 10 years of jaw-dropping growth. Three years ago, eBay boasted 30% more traffic than Amazon, but today its 84.5 million active users scarcely best Amazon...
...program is meant to gin up liquidity for corporate credit unions by enticing retail credit unions to deposit more of their money there, both by guaranteeing deposits and offering low-cost loans. Retail credit unions, also charmingly called natural-person credit unions, have been finding other places to stash funds as they've grown concerned about the stability of corporates. At the end of September, retail credit unions had $35.1 billion invested in corporate credit unions, down from $37.9 billion at the beginning of the year, according to the NCUA. Over that same period, total retail investments grew from...
...that outflow of deposits is also part of a longer-term trend away from corporate credit unions. When the corporates were set up in the 1970s, they were meant to provide the liquidity that retail credit unions couldn't get elsewhere. As the era of deregulation descended on the financial-services industry, though, retail credit unions were increasingly able to fund themselves directly in the capital markets. To stay competitive, corporate credit unions knew they had to pay higher yields - and that meant riskier investments. "Over time they morphed into something more like investment banks," says Charles Felker, a managing...
Today, even though only about one-fifth of all retail credit union deposits make their way to corporate credit unions, corporates still fill an important role in providing liquidity and other sorts of services - like check-processing - to the industry, especially to smaller outfits. Were a corporate credit union to fail, the industry would feel it. No one knows how far the impact would spread, and whether it would trigger the collapse of any retail credit unions. In 1995, Capital Corporate Credit Union, which serviced the White House and Pentagon employee credit unions, failed because of heavy investments in - wait...
What is certain is that no matter the long-term viability of the corporate credit union model as it currently exists, the NCUA is banking on retail credit unions having a short-term interest in preserving the system through such a trying time. The way the liquidity injection is structured, it is up to the retail credit unions to funnel money into the corporates. In explaining the program, NCUA chairman Michael Fryzel has been quick to point out that retail credit unions have a "vested interest" in their corporate brethren. Let's hope they do, to the tune of billions...