Financial cooperatives are secure, strong, and growing
(INDIANAPOLIS)—During these times of economic uncertainty and problems in some sectors of the
financial services industry, Indiana’s credit unions continue to enjoy strong growth in new deposits and loans,
including mortgage lending, and remain well-positioned to serve their 2.2 million members across the state.
Credit unions represent a financially solid safe-harbor in these uncertain times. Indiana credit union asset
growth for all of 2007, as well as this year, continued at the same strong pace as the past five years.
“Credit unions have been around since the early 1900s through economic ups and downs, and since they are
structured as member-owned, not-for-profit financial cooperatives, they take a more conservative approach to
their business than other types of financial services industry organizations,” explained Indiana Credit Union
League President John McKenzie.
“Credit unions take in deposits and make loans to people and business
owners within their fields of membership. Because they are owned by their members, instead of worrying
about generating profits for a separate group of stockholders, there is not an incentive for them to take on risks
like subprime mortgage lending that have resulted in problems for other types of financial institutions that
were chasing profits.”
McKenzie also noted that leaders in Congress have pointed to credit unions as an example of the right way to
approach providing financial services compared to other types of service providers that have gotten into
trouble.
Other facts about credit unions and the ways they serve their members:
• Federally chartered and state chartered/federally-insured credit unions have federal deposit insurance
through the National Credit Union Administration (NCUA) that, like the FDIC, is backed by the full
faith and credit of the United States government. Not one penny of insured savings has ever been lost
by a member of a federally insured credit union. This deposit insurance is backed by the U.S.
government for up to $100,000 on deposits by a member, with $250,000 in coverage for certain
retirement accounts. There are 87 million federally insured savings accounts at credit unions across the
country.
• Credit unions are very well-capitalized with the highest capital ratio of all depository institutions.
• In times of uncertainty, credit unions represent a safe harbor, as reflected in the strong growth in new
deposits from consumers at credit unions this year.
• Not only are credit unions a place consumers can trust to be safe and sound, they are also a place to
receive a good deal. Indiana’s 2.2 million credit union members benefit by close to $150 million
annually through better rates and lower fees compared to if the only choice available to consumers was
for-profit financial institutions. This is because credit unions are member-owned, not-for-profit,
cooperatives, with earnings not needed for reserves and operations being returned to members through
better rates and lower fees. |
