National Credit Union Administration (NCUA) is offering 1.5% loans

This caught my eye for one reason.

Who still gets to borrow money at 1.5% today?

The NCUA is offering $13 million in low interest loans to low income designated credit unions.

Each institution can borrow up to $500,000.

The money is supposed to help pay for new products and office expansions.

Applications are already open through the federal program.

On paper, this looks like a development program.

But it also says something about the pressure smaller credit unions are under.

If they could easily raise cheap capital on their own, there would be much less need for government backed financing.

Meanwhile, the biggest banks keep getting bigger.

Smaller community institutions keep disappearing through mergers or closures.

That is the backdrop for this program.

What I find interesting is the timing.

The government is making 1.5% money available in a world where borrowing costs are much higher.

That isn’t normal.

It suggests keeping smaller credit unions operating has become important enough to justify subsidized financing.

If demand for these loans is strong, don’t be surprised if similar programs get expanded.

Once government starts offering below market money to keep part of the financial system going, it rarely ends with just one round.