MADISON, Wis. (10/23/08)--Five news organizations--including U.S. News & World Report and MarketWatch--published articles Tuesday and Wednesday pointing out that credit unions are doing well during the global financial crisis.
Two of the articles say the banking industry's black eye has spurred gains for credit unions. An article and video in Rnews.com and News10now Oct. 21 indicate that banks' losses could be credit unions' gain.
"We have been talking about credit unions for a long time, that they are a great financial alternative, and I think the message is finally starting to hit home," Michael Lanotte, Credit Union Association of New York, told the newspapers. "Despite the economic downturn, credit unions are stable and safe, mainly because unlike banks, they are not for profits."
Mike Vadala of Summit FCU, Rochester, noted that credit unions' motive is "to take care of our members, not make a profit off of them"--a big differentiator in service, he said.
The article, which also quoted a Summit member, pointed out that credit unions are continuing to lend while banks are tightening their lending.
The takeovers, bailouts and government intervention plaguing the banking industry is having a positive effect on local credit unions, said credit unions interviewed by The Beaumont (Texas) Enterprise (Oct. 21).
Lisa Balone, senior vice president of marketing for DuPont Goodrich FCU, Nederland, Texas, told the newspaper that since the government's bank bailout bill, the credit union has seen $7 million in new deposits.
The biggest concern expressed among members is insurance and safety regarding accounts, she said. However, she provided information about credit unions' federal deposit insurance and coverage.
The article also interviewed Ron Burkhalter, president/CEO of Gulf CU, Groves, Texas, and Jason Landry, president/ CEO, Neches FCU, Port Neches, Texas.
Burkhalter pointed out that because members own credit unions, the credit union doesn't invest in subprime mortgages and is required to keep reserve capital. Landry said that increased familiarity is contributing to credit unions' growth. His credit union has about 33,000 members, up from 30,000 in October 2007. Hurricane Ike and new insurance guidelines has meant the credit union has more loans available.
The Orlando Sentinel (Oct. 21), notes that community banks and credit unions are still lending money while bigger banks aren't. As a result, McCoy FCU, Orlando, is seeing increased membership and a surge in car loan, unsecured signature loans and credit card applications, said A.C. Cowan, president. Cowan says "quite a few calls" are from people who are big bank customers now interested in credit unions.
MarketPlace (Oct. 22) distributed a press release from the Tennessee Credit Union League, which said that despite troubled times, Tennessee's credit unions continue to operate in a safe and sound manger, are open for business, and are meeting the financial service needs of members. It reemphasized that credit unions have not caused the current problems in the credit and equity markets and have not been involved in the types of loans, investments and financing practices that caused the problems. Credit unions continue to meet their members' lending and transaction needs.
With banks tightening lending standards and interest rates headed north, U.S. News & World Report (Oct. 22) noted that 90 million Americans are turning to credit unions.
The article discusses how to determine eligibility and where to find a credit union as well as benefits such as better rates, how credit unions have been affected by the current financial crisis, and their federal insurance. The article cites websites for more information, including that of the Credit Union National Association.
courtesy of cuna.org