The board of directors of the Washington Area Feminist Federal Credit Union (WAFFCU), with more than 600 accounts to honor, has voted unanimously to close operations and has asked the federal government to assist in a voluntary liquidation procedure, according to the National Credit Union Administration (NCUA).
Sources in the NCUA said the credit union could not honor approsimately $125,000 in savings deposits.
Credit union depositors are insured for up to $40,000 each, and all credit union members will recover their savings, according to the NCUA.
With an examination by the NCUA now complete, the agency must determine how the liquidation will be carried out.
The credit union gave four reasons for asking for the closing:
Withdrawals of $500 or more are pending for which the credit union does not have sufficient funds;
Total deposits and income have been steadily declining;
The credit union expects a sharp increase in expenses because its coleaser, the D.C. chapter of the National Organization for Women, is vacating the office they shared at 1424 16th St. N.W.
Several resignations by volunteer workers have weakened the organization's management.
According to credit union Vice President Bev Fisher of Washington, three or four withdrawals amounting to $20,000 caused the credit union's failure. The largest single withdrawal was for $9,000, she said.
"We're small," Fisher said, "And you're only required to maintain a certain amount of your deposits. Usually, a credit union would take a loan, but there's no way we could have taken a loan to cover such large withdrawals."
Fisher said almost 75 per cent of the accounts were for less than $100 each.
Fisher also blamed high risk loans and unpaid loans for the credit union's failure.
"I'm sure we took some big risks. In the first year we made some very high risk loans and those are the ones that are still with us today," she said.
She said the credit union was never able to declare a dividend.
"Our income fell off because of a large number of delinquent loans, and on a large number of our loans, there was no good collateral," she said.
"You can only do so much in collecting delinquent loans," she said. "We sent a certain percentage to a collection agency but they took 50 per cent of each collection. And collection lawyers take one-third, so it wasn't worth going to court."
Fisher also said a decline in volunteer workers at the credit union was a problem.
"That has been one of our problems from the start," she said. "The only paid staff is the person collecting delinquent loans. To run a credit union with no paid staff is a real problem."
She said there are no plans to reorganize and reopen WAFFCU in the near future.
"I think there is probably less need now for a feminist credit union than there was three years ago - at least for upper-middle and middle class women. but there are still a sizable number of women left with nowhere to turn."
One former credit union member said she was disillusioned by the collapse.
"I'm an idealist," she said. "When you discover that women don't pay their loans any better than men do, you become very disappointed. Optimistically, people felt that women would be a better risk if they were only given a fair shake."
"It's possible," she said, "that banks have been responding to women's needs more readily these days because of the Equal Credit Opportunity Act."
Georgia Camellos, president of the D.C. chapter of NOW, said the closing of the credit union will leave a financial vacuum for women.
"I think it's terribly unfortunate that WAFFCU has closed," said Camellos. "Access to credit for women is very important because we really have no financial institutions of our own - especially now."
Credit unions, unlike banks, are cooperative associations chartered by the federal or state governments to serve particular fields of membership. Members purchase shares by depositing savings and are entitled to collect dividends and to borrow money.
The feminist credit union was chartered by the National Credit Union Administration on Dec. 31, 1974, for Washington area women who had found it difficult to obtain credit from existing loan institutions. Membership reached nearly 700 at its height.