Talk:Credit union

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Contents

[edit] current situation/mission/purpose

There are several thousand credit unions - should 2-3 really be linked to directly?

  • Not sure how long ago this was posted (or by whom), but there now is a list of credit unions with its own entry. IMO, this is a better way to reflect the range of credit unions worldwide than attempting to shoehorn individual credit unions in the main page. Friejose
  • Quite agree. A list is going to be far easier to maintain and use. What would be useful, but probably too complex, is a zoomable map that would allow people to identify their nearest CU by mouseclick
  • Does listing in a piecemeal fasion, with an article which speaks to define what a credit union is, become defacto advertising for the few credit unions that have had their names placed on this page? In some ways, I can understand some one listing their own credit union if they are a consumer, but I can also see a credit union employee or Board member doing it as well. So at one point does a listing that isn't complete, become advertising? Stu 18:40, 15 October 2005 (UTC)
  • Generally, I don't think it as advertising, but definitely it could be. Well at least for me it isn't, I listed the credit unions I am involved in because I want to list it, not because I want to spread the word for someone to join it. Because chances are, because of membership eligibility requirements, this manner of marketing might only hit less than 1% of our eligible potential members (just throwing in some odd figure). This may be FREE advertising and it may work for credit unions as an industry, but definitely won't work for individual credit unions. -Mang Kiko 05:37, 25 January 2006 (UTC)
  • French speakers from the Maritimes or from Québec? The "caisses populaires" (credit unions)were founded in Québec not in the Maritimes and the vast majority of french speaking people came from Québec. Therefore I think we should replace Maritimes by Québec.

I would like to see more information on modern use of the Credit Union in the United States. Although the goals listed in the page are laudable, there seems to be a disturbing trend of credit unions attempting to serve all "banking needs" while retaining their advantageous tax and other status.

More and more, the Credit Union appears to be the contemporary equivalent of the Savings and Loan; yet as (at least supposedly) "account-holder owned" institutions, I can't figure out where the financial incentive is for these organizations and those who operate them - more and more small credit unions are being gobbled up by larger ones (emulating the banking industry), without the incentive of stock options.

Understand, my point is not that credit unions are "bad," simply that their original purpose of promoting savings seems to be dissapearing under the promotion of share drafts, ATMs, loans, and other "banking" services (most with fees equal to, or even greater than, traditional banks). I'd appreciate a more in-depth look by those knowledgable on the issue.

Hopefully I won't sound as if being Holier Than Thou. I am not here to debate, I am here to discuss... :)
I agree that credit unions have entered to serve ALL "banking needs" as we know it and retained tax-exempt status. However, credit unions are tax-exempt not because of limited financial products, it is because of the structure. Credit unions is mandated to make a profit since it needs to maintain 7% net worth to be considered financially sound. But it does not make profit for select individuals such as share holders and cannot raise capital by issuing stocks. It makes profit for its depositors (fondly called as members) by earning income from loans, investments, and god-forbid, fees. It is operated by a volunteer board of directors elected by the membership among the membership. Regardless of the balance in your account, one member can only have 1 vote and no proxy voting allowed. The main focus of a credit union is to help members make informed choices about their finances, be it investing, taking out a loan, or buying a new or used car, and offer competitive products and services.
Actually the main idea of a credit union is about credit. Where we being all construction workers from ABC Construction Company for example can pool all our money together, and those of us who needs to buy a car can borrow from that pool at interest rates that we, as a group, decide for ourselves. This is why credit union loves to characterize themselves as People Helping People.
There were 319 mergers approved by the NCUA in 2005 (Source: Credit Union Journal, Jan 24, 2006). Making it almost 1 merger a day (excluding Sunday, no mergers on Sundays). What makes up this large number are those small credit unions that didn't really offered those new products and services considered to be bank-products, and in the end, they are no longer viable to compete with other financial institutions and eventually needs to do voluntary liquidation or entertain a merger. A note on merger: credit union mergers are unlike most bank mergers. Credit unions are not bought by other credit unions and the merging credit union (the one that can't survive on its own) can entertain two or more other credit unions that will try and convince them that "if you merge with me, you get all this" sales pitch. Ultimately, the merging credit union members will have a vote on whether they want the merger to proceed or not. No money is actually gained by any member on these mergers and the merging credit union gains all the products and services provided by the continuing credit union at no extra cost to them. So they are gobbled up, but they have a say if they want to be gobbled up.
Definitely, you can never discount the fact that there are credit unions out there that are not taking to heart what they were created for and are starting to act like not credit unions (NOTE: I didn't say BANKS... lol). But offering more products and services doesn't make it a bank, since growth is simply a natural thing to do for any organization to thrive. In reality, despite the bank-like products and services credit unions offer, credit union market share didn't grow as much from 1993 to 2004 (Source: FDIC as cited by the California Credit Union League):
  • Largest 100 Banks: from 43.0% to 64.6%
  • Smaller Banks: from 51.3% to 28.9%
  • Credit Unions: from 5.7% to 6.5%

--:Mang Kiko 06:55, 25 January 2006 (UTC)


That sounds really nice, in a utopian sort of world (you certainly don't sound, "holier than thou," but you clearly have little scepticism on the subject, sounding a bit like a CUNA lobbyist). Many years ago, when my local municipal employee CU was eaten by a larger one, it wasn't anything like that pretty scenario you describe. Our little CU was more than solvent, had considerible cash-on-hand (the CU promoted savings, not ATMs or credit cards, which could be why we were so attractive), and was courted relentlessly by the acquiring CU. After being soundly rejected by the membership, they came back again this time being more politically-saavy (co-opting one of the paid officials with presumably a more solid retirement package, who pushed through increased fees and decreased services until the purchasing CU actually looked good; a bit more than a year later, the acquisition was approved by a sparcely-attended meeting). Yes, my old credit union pooled money for loan; the new one brings in mortgage service companies from which they receive payment for each suck...er...client who purchases a mortgage through them. (Hey, if you aren't allowed to offer a service, find someone who is and is willling to kickback, right?) From what I've seen in my CU, the days of people with a comminality pooling money for low-interest loans are long-gone, and there are other insentives for CUs to constantly advertise on radio, television, etc. When CUs start building expansive offices, rivaling the money large banking corporations spend on buildings and grounds, something is wrong. (One of these days, for my blog, I'm going to drive around taking pictures of the opulent new buildings local credit unions have built over the last ten years. Who paid for those expansive office suites? The "members," of course.)

As for, "less than 1 in 7 people who qualify for a credit union know that they qualify," that's easy; while once membership was restricted to employees of a given company or industry, or some other commonality, now anyone in a geographic region might be eligible to join multiple credit unions, so (for example) everyone in my county will be eligible to join my CU after the annual meeting when the charter is changed. My guess is that everyone in the country is probably eligible to join some credit union or another.

It is clear to me from the inside that there is some financial insentive for at least the paid officials (President, CEO, etc.) to grow the unions, but I can't figure out what it is. When the interest being paid is less than many local banks, the loan rates are higher than local banks, the service fees are greater and more numerous than large conglomerate banks, and still they claim to be, "People Helping People" by changing charters to "service" more people, I am certain it ain't out of some altruistic desire to "do good." That's not how the system works in this country. --Charlie Summers (who doesn't "register" on principle) 71.114.136.34 16:33, 2 May 2006 (UTC)

I am very passionate with my involvement with the credit union movement, but I agree entirely with what you said. There are credit unions out there that don't act like one and perhaps forgot what they existed for. There are credit unions out there with an executive position responsible in actively seeking potential mergers. So what's in it for the paid officials? Simple, more money for the acquiring and a great retirement package for the acquired CEO.
Despite all this, there are still credit unions and credit union professionals out there who volunteers their time to work for another credit union to save it, works hard to prevent a small employee credit union from merging, waiving the early withdrawal penalty on CDs because a member needs the money to pay the hospital bills for a family member, refused to take any pay increase and bonus for the despite credit union performance and instead proposed bonus dividend disbursement, and lots of other things. These are the things real credit union professionals do, you just don't hear about them because these professionals don't brag about it. Since bragging about it defeats the purpose of doing it.
The description is utopian, but we are one step closer to that utopian vision. As I always say, a Vision is something you can never achieve but you can surely try to get as close to it as possible.
-Mang Kiko 08:32, 2 June 2006 (UTC)

[edit] History

It would be great to have some information on the history of credit unions :) - FrancisTyers 00:47, 8 January 2006 (UTC)

Hi, Francis, I am very interested in, and involved in, the credit union industry, and have done a bit of work adding, editing, and rearanging the info on the history of credit unions in this article. I plan to work on a separate article on the history of credit unions at some point. I live in Massachusetts, the first state in the nation to pass enabling legislation for credit unions, and the first state to create an association. However, the first credit union in the U.S. was actually chartered in Manchester, New Hampshire (I have no idea why), and that city is home to America's Credit Union Museum. That's about a two hour drive for me, and I have a call in to the museum's director to take her out to lunch. I look forward to working on this aspect as time permits! --Mmpartee 03:45, 6 August 2006 (UTC)

I agree that's an important gap. I've added a section on credit union history; still working on some aspects of it like the expansion of credit unions in Latin America, Africa and Asia.Brett epic 20:15, 15 July 2007 (UTC)

[edit] North American statistics

The article reads: "The United States has nearly 85 million credit union members, however less than 1 in 7 people who qualify for a credit union know that they qualify..."

In other words, for every person that knows of his eligibility more than 6 other eligible people do not know of their eligibility. If we assume that all of the 85 million current credit union members in the US know of their eligibility for membership, then for each of the 85 million current members there are more than 6 other people in the US eligible for membership that do not know they are eligible. That means, based on the claims in the statement above, there are more than 595 million people in the US that are eligible for credit union membership. Given the US population is around 300 million this is obviously impossible.

Of course it is a result of survey. Like a random survey of 7,000 people resulted to only 1,000 people knowing they qualify for a credit union. So from the result we can somehow say that 1 out of 7 know they qualify. Then again, I don't know what the source of this statistic is. Maybe you can say "however less than 1 in 7 people surveyed who qualify for a credit union know that they qualify..."
Since the 1 out of 7 doesn't make sense statistically for the U.S. as is stated above, and was credited to the WOCCU (World Council of Credit Unions), I have decided to be bold and have removed it for now. Perhaps this stat had something to do with a world-wide stat? If this stat can be backed up, clarified or verified by someone, by all means go for it. --Mmpartee 06:02, 21 August 2006 (UTC)
EXPLANATION: I live in Los Angeles. I am Catholic. I am a graduate of two different Universities. I have different hobbies and interests. My wife is Lithuanian. I am Irish. As a result of the (all true) statements I just made, I can think of at least seven CU's I could become a member of if I so intended. The six uninformed people out of seven aren't necessarily unique people. In fact, I would argue that they are very likely NOT unique - if someone is unaware of a single CU affiliation they may have, the odds are probably high they aren't aware of ten others they might also have. Not rocket science.
Well, this argument is giving me quite a chuckle. Now that hundreds (if not thousands) of credit unions are chartered to serve large geographic areas, it is impossible to say how many credit unions a person COULD be a member of. If we were to follow this line of reasoning, we'd have to say that virtually no one is aware of ALL the credit unions that he/she could be a member of. It seems to me to be MUCH more useful and straightforward if we say something simple like 43.47% of the economcially active U.S. population belongs to one or more credit unions. --Mmpartee 02:41, 2 November 2006 (UTC)
Response to EXPLANATION: The sentence as written implies that the uninformed people are unique. If someone quotes website hits, or college graduates, or membership in a church denomination, or households with televisions, we assume they refer to unique hits, graduates, members, or households unless they specify otherwise. If your explanation is correct, the writer should say that explicitly. —The preceding unsigned comment was added by 76.185.99.12 (talk) 03:17, August 21, 2007 (UTC)

[edit] Pay higher interest to members?

The article claims credit unions pay higher interest rates to those who keep their money there. Is this true? I got a pretty pitiful interest rate at the credit unions I used, until I moved the money into a for-profit MMA. MrVoluntarist 17:37, 6 June 2006 (UTC)

It is not necessarily true that credit unions pay higher dividend rate on their savings and lower rates on loans as compared to their for-profit counterparts. Especially today where most financial institutions might have given out low rate loans and are now in the bind to increasing rates. At least my credit union pays me more in interest than the other financial institutions out there (be it credit union or not).
Okay, then that statement at the beginning needs to go, right? MrVoluntarist 23:13, 6 June 2006 (UTC)
On average, credit unions pay better rates than banks. But of course, in some markets there are credit unions whose rates are the same as banks if not slightly lower. Factor in poorly-run and/or bankish credit unions and the rates slip down a bit too. But traditionally, credit unions' rates (on deposits and credit) are very favorable compared to banks'. Dubc0724 12:55, 19 June 2006 (UTC)
Sorry, I don't buy it. I've never seen a good interest rate from a credit union on my savings or MMA. I'll want a source before any claim about historical trend or tendency is re-inserted. MrVoluntarist 17:26, 19 June 2006 (UTC)
First of all, "good" is relative. All rates have sucked for years, because we're coming out of a 40 year low. But do they "suck less" than banks? Yep, usually. I'm not sure what market you're in - it certainly can vary. But check out clarkhoward.com and bankrate.com for interest rate surveys. Also look at rate indicators from corporate credit unions tracking natural person CUs' rates. I'll start looking for some sources as well. Dubc0724 17:34, 19 June 2006 (UTC)
I meant "good" relative to those offered by for-profit institutions, genius. MrVoluntarist 17:35, 19 June 2006 (UTC)
So we should remove it without a source, but based on one person's singular anecdotal evidence? I don't buy that either. Plus I think that comparing a MMA to a savings account is disingeuous regardless of the type of institution. However, let's go to a source. See http://www.bankrate.com/brm/news/sav/20021209a.asp for general national information. Perhaps a more general tone needs to be used. I can't find a single source that indicates that banks offer consumers a better deal on anything, but the statement should not be an absolute.Jim Miller 17:54, 19 June 2006 (UTC)
The burden is on those wishing to add, not wishing to remove. Again, is each and every person who uses a bank an idiot? MrVoluntarist 17:55, 19 June 2006 (UTC)
First of all, calm down, Junior. You didn't say relative, so just saying the rates aren't good doesn't really get us anywhere. Here's one comparison that is updated weekly. (not savings/MMA but CDs and loan rates). More to come. http://www.bankrate.com/brm/static/compare.asp Dubc0724 17:40, 19 June 2006 (UTC)
Right. I didn't say relative. It's just that that's the only meaning in context that wouldn't look totally idiotic. Do you know what context is? Do you know why I don't act like your use of the term "relative" refers to members of my family? Thanks for assuming I'm an idiot before inferring the meaning of my statements from context. As for the rates, looks like banks win on loans, while it ignores MMA's and checking accounts, i.e., the very topic of discussion. MrVoluntarist 17:53, 19 June 2006 (UTC)
While I'm thinking about it, you're leaving out two other important components. First, not all CUs are alike. You might only be eligible to join a CU that happens to have some strategic reason (good or bad) for paying lower rates. Secondly, focusing solely on rates ignores the fee/service charge aspect. Credit unions generally beat banks on both rates and fees. However, your mileage may vary. Dubc0724 17:44, 19 June 2006 (UTC)
So, why does anyone ever use any bank at all? Because they're all stupid? MrVoluntarist 17:53, 19 June 2006 (UTC)
Another good source. I think the comment can be reinserted, but needs to say something to the effect of "On average they pay better rates". http://banking.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=banking&zu=http%3A%2F%2Fwww.creditunion.coop%2Fratedex.php
So, why does anyone ever use any bank at all? Because they're all stupid? I wouldn't say that. I'd say a lot of people don't have access to a CU, and many that do have access don't know. Some people are stuck with a credit union that doesn't know how to operate to return value to members. But by and large, credit unions haven't had the means (or the willingness) to market themselves and the difference. Dubc0724 17:59, 19 June 2006 (UTC)

...Do you know what context is? Do you know why I don't act like your use of the term "relative" refers to members of my family? Thanks for assuming I'm an idiot... Wow. I'm the one assuming someone is an idiot?? Dubc0724 18:05, 19 June 2006 (UTC)

You assumed the most ridiculous meaning of the statement I gave, and then proudly refuted such a ridiculous claim. Who's wasting whose time here? MrVoluntarist 18:07, 19 June 2006 (UTC)
No, I addressed it as it was written, just in case you were someone spouting off an opinion - there are many people like that here. But we both know you're not one of those people. I then gave two sources that support the notion that credit unions typically outperform banks from a rate perspective. The second source is more comprehensive and more fully addresses the specific topics up for discussion. My apologies if I hurt your feelings, but let's try to move on. Dubc0724 18:13, 19 June 2006 (UTC)
No problem. In the future, it would help in your interaction with others if you didn't assume the most ridiculous possible meaning of what they stated. It's called assuming good faith. Just a heads up. MrVoluntarist 18:17, 19 June 2006 (UTC)
I think this has been blown way out of proportion but I see your point. You deal with enough ridiculous people on here and you come to expect it. Maybe I did that. But also may I suggest a higher level of civility in the future. Cheers! Dubc0724 18:23, 19 June 2006 (UTC)

[edit] Another annoying gripe about the article

Is it really appropriate to link mutualism (economic theory)? Mutualists are just one of about a zillion groups that think credit unions are the way to go. Mutualists' only real claim of a connection is Pierre-Joseph Proudhon's independent discovery that, hey, credit union-like arragements might be a good idea, neglecting that they had been in operation in England a generation before his birth. MrVoluntarist 03:58, 24 June 2006 (UTC)

Could go either way. Probably doesn't hurt to leave it in, but I don't have strong feelings either way. Dubc0724 13:23, 26 June 2006 (UTC)
How about linking co-operative instead, or whatever the appropriate nearest superset of "credit union" is? That is, link to an article about cooperative-type organizational methods. The reason I don't like linking mutualism is because I think it implicitly gives too much credit (yeah yeah, a pun) to mutualists and subtly reinforces the idea that their "discovery" was somehow novel. Also, mutualists prefer mutual banks which are actually different. MrVoluntarist 14:58, 26 June 2006 (UTC)
I agree very much. Credit unions are cooperatives, and you're right - mutuals are a different animal altogether. Thanks... Dubc0724 15:03, 26 June 2006 (UTC)

[edit] NCUA article needs help

I hope some of you folk who know and care about credit unions will help fix up the NCUA article! 69.87.204.224 11:00, 1 December 2006 (UTC)

[edit] Board of Directors elected?

"A credit union is a not-for-profit co-operative financial institution that is owned and controlled by its members, through the election of a volunteer Board of Directors elected from the membership itself."

Well, that is a nice beginning, but needs further explanation. Is the BOD election one-member-one-vote, weighted by your level of savings/investments in the credit union, or what? What if you are mainly a borrower? (Then there is the matter of explaining the real politics of how these elections work, but right now I'm just asking about the details of the theory/mechanics.) 69.87.204.224 11:12, 1 December 2006 (UTC)

One member, one vote. Whether you have the minimum share deposit or several hundred thousand dollars on deposit, you have exactly the same right to vote. Dubc0724 16:36, 1 December 2006 (UTC)

[edit] Credit Unions versus Banks

Rogklien's latest edits are very interesting. Although the comments are fairly factual, it is apparent that the edits are removing language that paints CU's in a more favorable light, and has added some statements to paint banks in a more favorable light. Since this kind of thing is only going to accelerate as more and more people involved with these industries discover wikipedia, I propose that these type of edits be kept to an absolute minimum, and also ought to be discussed here on the talk page. I am going to make an important addition to the article to try to keep future edit wars to a dull roar, and that is to add a new section of this article for points of contention between banks and credit unions. I am going to move some of Rogklien's, and others', statements to this new section.

One additional note: The current photo in the sidebar of the article (Financial Market Participants) is wildly inappropriate for credit unions. The vast majority of credit unions exist in modest office buildings. Very few exist in anything looking like a skyscraper. --Mmpartee 15:17, 4 March 2007 (UTC)

Rogklien has modified a portion of this new section. Rogklien, I invite you to discuss such changes here first. I've never heard from a neutral person that credit unions should be taxed because they don't have charitable goals. This is an argument that only a banking lobbyist would make, and it's not even a very strong one. There are thousands of non-profit organizations that are tax exempt and not charities, such as universities, civic groups, and social clubs. And I've provided references for the two major points that I made in this section. You are not providing any sources. Since I feel this argument is [WP:NN], I'm taking it out. Also, Rogklien has changed this new section to be Credit Unions and Public Policy. I don't know of anybody not affiliated with banks that is concerned about public policy in regards to credit unions. I think it is misleading to label this section as such. Therefore, I'm changing it back. Rogklien, I think you are doing a great job of being fairly factual (I'm sure you could word your statements much more harshly), but I do feel that these changes are misleading and show bias. If you have sources to support your claims, please reference them in regards to any changes that you make to this article. Thank you. --Mmpartee 05:39, 5 March 2007 (UTC)

[edit] Inappropriate hack

Ummmmmmmm.... this article received a major axechop from an unregistered user. There was some useful editing done, but important sections were deleted wholesale. Can an experienced wikipedian get this back to how it was? --Mmpartee 12:37, 25 May 2007 (UTC)

I've reverted the article back to a version before that edit. Gobonobo T C 12:57, 25 May 2007 (UTC)

[edit] An Article on Credit Unions Globally

With credit unions operating in over 100 countries around the world, serving everyone from World Bank staff to bidi rollers in Madhya Pradesh, this article is not capturing their global presence. On dimensions like

  • institutional diversity (within credit union principles),
  • market segments served,
  • regulation and supervision,
  • product characteristics and mixes,
  • structure and evolution of credit union federations and their relations with other cooperatives,

(among others) there is incredible diversity, sophistication and complexity in national credit unions systems.

We in the credit union industry (I'm from a credit union in Canada) are being discredited every day in international forums by mainstream bankers and other microcredit practitioners who argue that credit unions in developing countries are not professional, are unstable and don't serve ordinary people in those countries.

On top of that, representatives of European cooperative banks (and the Desjardins banking system in Quebec) advanced an argument at a World Bank Conference on cooperative banking in Washington in April '07 that the Anglo-Saxon model of credit unions is far less financially stable and more costly to operate than the European (and Quebec) models. This article should position credit unions against those criticisms, which are largely off-base.Brett epic 20:45, 15 July 2007 (UTC)

[edit] An Article in US Credit Unions?

There's a lot of interesting US content that could be written; it would certainly justify a separate article. On the other hand the repeated assertions in the present article that credit unions are 'non-profit' organizations (not true in most countries), and repeated references to arguments between bankers and credit unionists in the US about tax status seem more relevant to a separate article on US credit unions. Would anyone like to write it?Brett epic 20:45, 15 July 2007 (UTC)

Possibly at some point. At the moment, the rest of the article wouldn't hold up too well if the US content was moved. Probably we can grow a bit as it is before we consider splitting off. --Pearrari (talk) 02:42, 5 December 2007 (UTC)