What's Special about Credit Unions? They're Not Banks

By Schaefer, Marcus | American Banker, November 21, 1996 | Go to article overview

What's Special about Credit Unions? They're Not Banks


Schaefer, Marcus, American Banker


In his Nov. 7 commentary, "What's So Special About Credit Unions?" Bill Issac blithely suggested credit unions are no longer needed as an alternative type of financial institution. He maintains that credit union members are more affluent than nonmembers, that credit unions don't provide any services that other financial institutions don't provide, and that they can no longer justify their exemption from federal income tax.

However, it stands to reason that credit union members have higher incomes than noncredit union members; by definition, they're employed when they join, whereas nonmembers include the unemployed. Clearly, the relevant comparison the author avoids is credit union-member household incomes to bank-customer household incomes. Nor does he comment on nonbank customer incomes.

What's more, estimated household-income data of any type can't fully tell the story of the millions of working families served by credit unions. In the North Carolina markets, where the American Bankers Association has chosen to sue the National Credit Union Administration for permitting small businesses to offer membership in AT&T Family Federal Credit Union, banks either deny service or price their services so that furniture, shoe, and textile factory workers cannot realistically afford them, given their modest disposable incomes.

Michael Griffen of the ABA has admitted that a certain percentage of the population simply can't be served by banks and will provide a market for check-cashers and pawnbrokers. In Asheboro, N.C., with a population of 39,000, 11 finance companies exist (at least one owned by a bank), and two pawnshops that will cash a $230 paycheck for $15. Meanwhile, a check-cashing store plans to open soon. While Comptroller of the Currency Eugene A. Ludwig and Under Secretary of the Treasury Jerry Hawke try to cajole banks into serving unbanked citizens, credit unions are already doing so. Do bankers seek to protect a market they do not intend to serve? There is an obvious place in these markets for nonprofit financial institutions. Why should public policy lead us to eliminate credit unions as a consumer option, as Mr. Issac suggests?

Interestingly, Mr. Issac touts the banks' successes in entering the investment underwriting and insurance businesses, while he advocates that credit unions return to the bankers' interpretation of the 1934 Federal Credit Union Act. Loosened regulatory restrictions, along with four years of record profits, rapid asset growth, and the dismantling of the thrift industry as competitors have apparently not sated bankers' appetite for eliminating credit union competition.

Bank trade associations have effectively been advocating that all transaction-based financial institutions be included in one risk pool. This would clearly result in a monopoly of one type - banks. This is unsound public policy. The consumer wants a choice of financial institutions and wants credit unions included. The financial services sector should have diversification by institution type that includes credit unions, with their separate risk pool, their different pricing policies, and a different philosophy of ownership. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

What's Special about Credit Unions? They're Not Banks
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.