The only thing I can find in the NCUA records about not paying dividends was 2 Unified Singers cases and a couple other odd cases.Here's the searchText

The NCUA person I talked to said all the case's he's done everyone got all principal and interest back unless there was "insider dealings". When I asked about Unified Singers he said he could not comment on it because he'd never heard of it and if he did know about it he still could not comment on it but to call 703 518 6330. I called yesterday and today and no one has gotten back to me with an answer yet.
It would be great to get an explanation in writing to post to end all our worries,but it sounds like the Unified Singers cases must have involved insider deals.

Is a bank CD safer than a Credit Union CD?

I think so...if it's a national bank CD. National banks, generally, have to conform to more stringent guidelines than credit unions or state banks. Therefore, the likelihood that the credit union would fail and you'd actually have to get into an insurance scenario is higher.

I talked to Sam Maldonado of the NCUA today. After looking up the Unified Singers case Sam said the dividends where not paid monthly so they were not insured. That's why the NCUA only paid principal back in that case.
If your credit union pays dividends into your account monthly they are insured and safe.
Just to be on the safe side I will have all my credit union's mail me monthly interest/dividend checks.
Sam also said that with a bank it is a contractual aggreement so FDIC allways pays principal and interest back. NCUA does cover dividends/interest if the account is set up to be paid monthly.

Sam can be reached at 678-443-3022.

YOU MUST READ THE FINE PRINT AND GET DIVIDENDS MONTHLY TO HAVE THE NCUA EQUAL THE FDIC!

I see no basis for the monthly payment of dividends having anything to do with NCUA's liability. I'd like to know Sam's title.

Perhaps if dividends have been declared on the account, then they are covered under the law because they are then a legal obligation of the credit union. Certainly, if they have been credited to your account they are then insured.

It's looking like a CU Share certificate is more like a preferred stock with a guarantee on the principal price.
Dividends have to be declared to be an obligation of the CU.

traderprofit said:I see no basis for the monthly payment of dividends having anything to do with NCUA's liability. I'd like to know Sam's title.

Perhaps if dividends have been declared on the account, then they are covered under the law because they are then a legal obligation of the credit union. Certainly, if they have been credited to your account they are then insured.

It's looking like a CU Share certificate is more like a preferred stock with a guarantee on the principal price.
Dividends have to be declared to be an obligation of the CU.

Why don't you call Sam and ask his title?

I agree with the preferred stock analogy, although I don't think the credit union "declaring a dividend" (whatever that would mean in terms of a CD) or even crediting it to the account, gives you much safety that it will be covered. If the credit union has no earnings, and pays out dividends "in error" , IMO the dividends should be reversible. The way a credit union is set up, is nothing but bringing together the financial resources of its members to hopefully make profts on lending that can be distributed as dividends to the members. But if there are no earnings, there is nothing to distribute. In the case of a bank, the ownership lies with the stock holders. In a bad year, the bank still has to pay its obligations, and it will reduce shareholder's profits (or causing a loss on their share value). In the case of a CU, effectively you're the shareholder, so in a bad year you can't get the full earnings on the CD.

A lawyer from NCUA finally called me today. He said that for CU share certificates you are insured for the principal and dividends already paid on your account. The rate is not guaranteed if the CU does not have earnings for the payout. According to him, 99.99% of the time the quoted interest rate is paid over the life of the share certificate...must do your homework though as to the financial soundness of the CU you are joining.

As to bank CD's, if they fail, you are not guaranteed to get the quoted interest rate either.

mariojm- that's what the lawyer said...in reference to the higher share rates