Changes made to prevent repeat of Shippagan situation

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FREDERICTON - Government has introduced a slew of changes to credit unions and caisse populaires in hopes of preventing a repeat of the situation like the one in Shippagan last year, which led to the provincial government giving a $60 million bailout to the system.

Among the key changes is a limit on the deposit insurance for each account at the institutions. The Liberals are scrapping the previous Conservative government's policy of guaranteeing all deposits and instead capping the amount at $250,000 per account.

That ceiling is in line with other Atlantic provinces, said Justice Minister T.J. Burke.

"In the event that a credit union goes into bankruptcy, taxpayers will not have to pay 100 per cent of the deposits that are in the banks," he said.

Robert Penney, the province's superintendent of credit unions, said although it's impossible to say definitively, it's likely the changes would have prevented the Shippagan situation.

"No one of these changes would have prevented Shippagan, but all of them as a group probably would have," he said.

The Shippagan credit union was at the centre of controversy surrounding government's decision to give $60 million to the province's credit union and caisse populaire systems.

Besides the $31.5-million grant for Shippagan, the caisse populaire also received $10 million in repayable shares. As well, $18.5 million is being given to the N.B. Credit Union Deposit Insurance Corp.

Other changes include requiring a credit union or caisse populaire to comply with an order from the superintendent within 15 days after it's issued.

The order must continue to be followed while an appeal is being considered, rather than waiting for the results of an appeal before implementing the order.

"The superintendent of credit unions has the power to put them under immediate supervision and then they must comply with that specific order and then appeal later," said Burke. "Prior to this bill being introduced, they had the opportunity to appeal immediately."

As well, the deputy ministers for the departments of finance and justice will now be members of the New Brunswick Credit Union Deposit Insurance Corporation.

Earlier this year, the province's auditor general said government should either give the corporation, which insures the deposits held by credit unions and caisse populaires, more resources or consider getting rid of it altogether.