Minister Noel addresses removal of Board of Directors of Labrador Savings Credit Union

Walter Noel, Minister of Government Services and Lands and minister responsible for the Credit Union Deposit Guarantee Corporation (CUDGC), says actions taken by the corporation with respect to the Labrador Savings Credit Union were necessary to protect the assets of depositors and the credit union system.

Minister Noel, who is also the minister responsible for consumer affairs, said: "CUDGC is a provincial Crown corporation established to provide deposit insurance to credit union members and to regulate credit unions. When necessary, the corporation must take prudent action, based on sound business and financial guidelines and practices. They acted at this time to prevent serious financial consequences and protect the assets of members and the integrity of the credit union system."

On Friday, November 23, 2001, the corporation removed the Board of Directors of the Labrador Savings Credit Union for failure to comply with directives from CUDGC and the Superintendent of Credit Unions with respect to unauthorized commercial lending, undersecured loans, high debt ratio loans, and a large line of credit at a high interest rate. The corporation also made a decision to merge the Labrador Savings Credit Union with the Eagle River Credit Union.

CUDGC�s board will hold a members� meeting this evening (Thursday, January 24) in Happy Valley-Goose Bay to explain the reasons for its decisions and answer any questions.

"The corporation has sole responsibility for regulating credit unions and it would not be appropriate for me to attend this meeting," Minister Noel said.

Media contact: Rick Callahan, Communications, (709) 729-4860.

2002 01 24                           4:20 p.m.