By Ralph Nader
While the reckless giant banks are shattering like an over-heated glacier day by day, the nation’s credit unions are a relative island of calm largely apart from the vortex of casino capitalism.
Eighty five million Americans belong to credit unions which are not-for-profit cooperatives owned by their members who are depositors and borrowers. Your neighborhood or workplace credit union did not invest in these notorious speculative derivatives nor did they offer people “teaser rates” to sign on for a home mortgage they could not afford.
Ninety one percent of the 8,000 credit unions are reporting greater overall growth in mortgage lending than any other kinds of consumer loans they are extending. They are federally insured by the National Credit Union Administration (NCUA) for up to $250,000 per account, such as the FDIC does for depositors in commercial banks.
They are well-capitalized because of regulation and because they do not have an incentive to go for high-risk, highly leveraged speculation to increase stock values and the value of the bosses’ stock options as do the commercial banks.
Credit Unions have no shareholders nor stock nor stock options; they are responsible to their owner-members who are their customers.
There are even some special low-income credit unions-thought not nearly enough-to stimulate economic activities in these communities and to provide “banking” services in areas where poor people can’t afford or are not provided services by commercial banks.
According to Mike Schenk, an economist with the Credit Union National Association, there is another reason why credit unions avoided the mortgage debacle that is consuming the big banks.
Credit Unions, he says, are “portfolio lenders. That means they hold in their portfolios most of the loans they originate instead of selling them to investors….so they care about the financial performance of those loans.”
Keep reading Banking on Credit Unions at Common Dreams→
Hat tip to Janie Sheppard and Dan Hamburg
See also Mendo-Lake Credit Union→