The federal government bailed out mortgage giants Fannie Mae and Freddie Mac earlier this month.

And in the last week, struggling national banks Washington Mutual and Wachovia were sold to JPMorgan Chase and Citigroup.

While the nation’s financial system is in disarray, including a record 777-point drop by the Dow Jones industrials on Monday, local credit unions are benefiting from new customers jumping ship from larger institutions that were hammered by the mortgage crisis.

Bay Federal Credit Union has added 1,270 new accounts worth close to $15 million over the past two weeks, senior vice president Tonee Picard said. The new account total is 40 percent more than a typical two-week period, she said.

Santa Cruz Community Credit Union has also “seen the exodus from some of the national banks,” said Sheila Schat, the credit union’s director of community development.

“We’ve definitely seen the traffic coming over from the banks,” Picard said. “I think all of the local credit unions and banks are seeing the money coming over from the larger banks.”

“I think our national crisis does really underscore the relevance of locally owned financial institutions,” Schat said.

Depositors’ shares in Bay Federal and the Santa Cruz Community Credit Union are insured by the National Credit Union Administration, an independent federal agency. Most accounts are insured to at least $100,000, with recent legislation having increased coverage on certain retirement accounts, such as IRAs, to $250,000.

“Money here is absolutely safe and sound,” said Schat, who noted that Santa Cruz Community Credit Union has actually expanded its lending to small businesses. “There’s no chance we’re going to fail.”

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(Published in 10/1/08 edition)

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