Newbridge Credit Union is to be bailed out at a cost of nearly €54m, and has been labelled as "the Anglo Irish Bank" of credit unions.
The body has been taken over by Permanent TSB, following an emergency High Court sitting last night.
The troubled financial institution had a special manager appointed in 2012, after it ran into serious financial difficulties.
Members have withdrawn up to €20m euro in savings recently, but members are being assured that all deposits up to €100,000 per person are protected.
Financial commentator Eddie Hobbs said the credit union had been in "very serious breach" of regulations as far back as 2004, lending more than permitted under legislation.
"There is a rule under the Credit Union Act which says that because all of your deposits are available on demand, you can't lend more than 10% of your asset base out longer than 10 years.
"And at that stage, Newbridge was at about 30%. So they were the Anglo Irish Bank of the Credit Union market."
However, Chairman of the Newbridge Credit Union Action Group, Willie Crowley, claims the credit unions finances weren't mismanaged.
"We deny that a lot of the statements that have been made are … true," he said.
"There have been large loans, but there were also large deposits, you must remember. This was in the era of the Celtic boom. People had millions and millions on deposit in Newbridge credit union."
Mr Crowley also said the Action Group will be challenging the takeover of the credit union by Permanent TSB in the courts and at European level.
The Government has already set aside €1bn for cases like Newbridge, under the credit union restructuring fund.