February 21, 2009

Banking On Credit Unions [I'm so lucky to have smart parents]

From nader.org:

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.

click here for the whole thing

The main point of the article is that there are some "credit unions" that are credit union in name only, basically. Big corporate ones who work like the big loan shark banks.

Lucky for myself and my family, we belong to an NCUA backed credit union. I was recently back in Texas and went in to my local credit union to talk about a CD account of mine that had recently matured. The atmosphere in there was really laid back, just like I'd always remembered our credit union being. Also much like the credit union over here in New Orleans that I use to deposit checks, it's just so quiet and calm, not how you'd expect a bank to be at this time. But, it's not really a "bank" in 21st century terms anyway.

It's not like we're on easy street or anything, because we're surely not at the moment, but it's good to know that my family's banking methods did not contribute to the downfall of our economy.

Not to rub it in anyone's face, or anything...

But if you're a credit union member, make sure they are not tempted to turn in to Wall Street style casinos, because:

The one area that is now spelling some trouble [...] comes from the so-called “corporate credit unions”—a terrible nomenclature—which were established to provide liquidity for the retail credit unions. [...] They invested in those risky mortgage securities with the money from the retail credit unions. These “toxic assets” have fallen $14 billion among the 28 corporate credit unions involved.

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