Credit unions in the United States serve 100 million members, comprising 43.7% of the economically active population. The US credit union is not a nonprofit, cooperative, tax-exempt organization. Clients from credit unions become partners of financial institutions and their presence focuses in a particular environment because they concentrate their services in a particular community. In March 2016, the largest American credit union was the Federal Navy Credit Union, which served employees of the US Department of Defense, contractors, and family service officers, with over $ 75 billion USD in assets and over 6.1 million members. Total credit union assets in the US reach $ 1 trillion as of March 2012. About 236,056 people are employed directly by credit unions per data derived from Credit Union NCUA Directory 2012.
Due to its small size and limited exposure to mortgage securitization, the credit union has weathered the 2008 financial crisis quite well. However, the two largest credit unions in the United States (US Credit Union and WesCorp) with a combined asset of more than $ 57 billion were taken over by the federal government's National Credit Union Administration on March 20, 2009.
Video Credit unions in the United States
History
St. Mary's Bank of Manchester, New Hampshire holds the distinction of being the first credit union in the United States. Aided by private visits from Canadian credit union pioneers Alphonse Desjardins, Cooperative Credit Association St. Mary was founded by a French-speaking immigrant to Manchester from the Canadian Maritime Province on November 24, 1908. As the leader of St. Marie, Monsignor Pierre Hevey was instrumental in setting up the credit union. Lawyer Joseph Boivin manages the credit union, as a volunteer, out of his house at night. The American Credit Union Museum now occupies the home of Boivin, where St. Mary's Bank first operates.
Pierre Jay, a central banker and Edward Filene, a Bostonian merchant and philanthropist, played an important role in enforcing possible legislation in Massachusetts in 1908.
Filene philanthropy, combined with the practical implementation effort of his associate Roy Bergengren is very important for the emergence of credit unions throughout the United States. Unlike the German or Quebec credit unions, most of the credit unions in the US emerge from association-based associations of employers. In addition to traditional information and law enforcement benefits resulting from the fact that members share the same workplace, employer-based ties allow credit unions to use future pay as collateral.
The Credit Union National Extension Bureau, the forerunner of the Credit Union National Association was formed as a confederation of state leagues at a meeting in Estes Park, Colorado in 1934. Attendees at the meeting included Dora Maxwell who will continue to help build hundreds of credit unions and programs for the poor in his lifetime and Louise McCarren Herring, who worked to form credit unions and ensure their safe operation earned the title "Mother of Credit Unions" in the United States.
The number of credit unions peaked in 1969 with 23,866 institutions and total assets of $ 16 billion.
A museum about the history of credit unions, the American Credit Union Museum, is located in Manchester, New Hampshire. Opened in 2002.
Maps Credit unions in the United States
Constitution and regulation
Credit unions in the United States can be rented by the federal government ("credit union federal") or state government. The states of Delaware, South Dakota, and Wyoming do not regulate state-level credit unions; In such countries, credit unions must obtain a federal charter to operate. All federal credit unions and 95% of the state-charter credit unions have "stock insurance" (deposit insurance) of at least $ 250,000 per member through the National Credit Union Insurance Funds Insurance Fund (NCUSIF). This deposit insurance is supported by full confidence and credit from the government of the United States and is managed by the National Credit Union Administration. As of December 2006, NCUSIF had a higher capital-insurance ratio than the funds for Federal Deposit Insurance Corporation (FDIC). The US credit union also typically has a higher equity capital ratio than a US bank.
By the end of 2016, the National Credit Union Shares Insurance Fund is insuring more than $ 1 trillion in deposits in 5,785 non-profit US credit cooperatives. In comparison, the FDIC insured more than $ 13 trillion in deposits at 5,980 banks and austerity agencies. NCUA and FDIC are both independent federal agencies backed by full confidence and credit from the US government.
Membership restrictions
In the United States, as elsewhere, credit unions have historically been formed around one church, workplace, union, or city. Membership is limited to those in the membership field. The Federal Bill of Credit Act of 1934 limits membership to "groups with well-connected occupation or association ties, or groups in well-defined rural environments, communities or rural districts."
The 1982 federal regulations during the Ronald Reagan presidency allowed many credit unions to grow their membership and expand into several states. The membership of the credit union reached 71 million members in 1997, more than doubling the number of members in 1991. This expansion prompted banks to oppose the 1982 regulation as illegal, a challenge upheld in the 1998 US Supreme Court ruling, NCUA v. First National Bank & amp; Trust Within five months, both Congressional assemblies passed a bill signed by President Clinton to overturn the Court's decision.
By law, and for tax purposes, the credit union in the US is considered a nonprofit organization. Banks argue that this status frees credit unions from many federal and state taxes, this gives credit to the union as a competitive advantage. In 2003, the US government regulatory body required credit unions to limit their membership to certain segments of the population, such as people living, working, worshiping, or attending in a well-defined geographical area; certain company or trade employees; members of certain nonprofit groups, including trade unions, alumni associations, conservation or other advocacy organizations, churches, churches, or the like; or specific work groups, such as teachers, doctors, etc. In the US this is referred to as the "membership field" of credit unions, internationally associate bonding terms are used.
Credit unions can usually be hired to serve a specific employee or group or association group (often called the Select Employee Group or "SEG Charter"), any trade, industry, or profession member ("TIP Charter"), or have a "Community Charter" usually the membership area of ​​anyone who lives, works, goes to school, or attends religious services in a particular city, district, or district). When the credit union transfers to the Community Charter of the SEG Charter or the TIP Charter, it can continue to serve existing members as well as anyone who lives, works, worships, or attends school in a new geographic area of ​​membership, but can not recognize new members of the former SEG s) or TIP (unless the group is within the "new community credit union limit"). Similarly, credit unions that convert to TIP or SEG charter of different types of charter can no longer accept new members from the old membership field.
Typically, member families - such as close family members or household members - can also join credit unions. In the United States, the Administration of the National Credit Union or state regulator - depending on whether the credit union is hired by the federal government or by a country - decides whether to approve or reject the proposed field for expansion of membership or exchange of charter to other credit union charter.
Smaller credit union mergers with different membership bases often produce credit unions in various ways to qualify for joining; thus, the credit union may have a much wider "membership field" than the name of the credit union.
Credit unions generally follow the "once-member, always member" principle, which allows members with current membership of the credit union to remain a member even if he or she will no longer qualify to be that way, such as leaving the company with whom he initially gained membership or moved to the geographical area specified by the credit union. However, many credit unions are entitled to the expulsion of members who cause financial losses. Some credit unions have also expelled members, including Board volunteers and elected Supervisory Committees, for making complaint complaints against the management of credit unions.
Low-income and low-income areas
Federal federation unions may apply to the NCUA for the Low Income Credit Union or LICU status. To qualify for LICU status, the majority of the membership of the credit union meets the specific requirements to be considered "low income". This LICU status allows credit unions to benefit from certain NCUA programs to increase their capacity to serve underserved populations who may not have access to credit or other financial services. In addition, some state regulators also provide similar low-income decisions.
Unlike banks, caught in underserved areas in the 1970s, credit unions are not subject to federal "reinvestment" requirements, essentially because of credit unions, by their nature and mission of "people who help, "already meet the financial needs of a broad spectrum of people who belong to their membership field, and play an active role in the development and growth of society. Credit unions, with Republican backing, have successfully lobbied to break free from the Community Reinvestment Act (USA), a law that forces banks to provide services in low-income areas.
In 2006, the US credit union approved 69% of mortgage applications they received from low- and middle-income individuals, while other US mortgage lenders agreed only 47%, according to data collected in accordance with the Mortgage Disclosure Act. The same data shows that US credit unions approve 62% of minority members' mortgage applications, compared to 51% for other US mortgage lenders. The data also shows that 25.2% of all US mortgage loans are for low- or middle-income debtors, compared to 20.6% in other US mortgage lenders. However, the NCUA has long advocated no US credit unions to lend to its members they may not be able to repay, and has banned other types of grumpy credit and cruel credit practices. The federal credit union is also prohibited from imposing a prepaid penalty for a loan.
Credit unions are still trying to find ways to serve this market and offer loan products that benefit their membership. Some partner with financial technology companies (FinTech) such as OnDeck Capital and Think Finance that provide online loan origination and management software, freeing credit unions from having to build them from scratch.
Interest rate
United States credit unions usually pay dividends (interest) higher on shares (deposits) and impose lower loan interest rates than banks. Therefore, credit unions often have higher asset costs (ie, interest costs as a percentage of average assets) than commercial banks, with aggregate US credit union fees from assets higher than the aggregate cost of US bank assets in eight of thirteen years between 1995 and 2007. Credit union revenues (from loans and investments), however, need to exceed operating costs and dividends (interest paid on deposits) to maintain capital and solvency.
The policy of credit unions governing interest rates and other matters is determined by the voluntary Board of Directors elected by and from the membership itself.
League and association
Credit unions in the United States traditionally use state/state trade association ties that align credit unions with the "Credit Union Leagues" state followed by national affiliations with Credit Union National Association (CUNA) from Madison, Wisconsin. Federal federation unions may also become members of the National Association of Federal Credit Union (NAFCU). Credit unions may also participate in Credit Union Service Organizations (CUSO) that provide shared resources to credit union members such as call centers, loan teams, and data centers. Participating in CUSO allows credit unions to provide additional services to customers such as business loans and commercial real estate.
Credit unions with a special focus on serving low- and middle-income communities and communities are usually designated as low-income by the National Credit Union Administration (NCUA), often joining the National Federation of Community Development Credit of New York, the New York Trade Union (Federation), trade associations national governments that provide investment, technical assistance, education and training and advocacy for national credit credit unions (CDCU).
Credit unions vs banks
Establishing an account on a credit union usually requires a smaller deposit than a bank; credit unions usually require $ 5- $ 30 to open accounts, while large banks sometimes require a $ 50- $ 100 deposit. The minimum deposit required to join a credit union is called share and assigns the depositor as a member with full ownership rights.
Tension is always there between member-owned member banks and non-profit banks in the United States. When credit unions first organized in the US at the beginning of the 20th century, the banking industry was opposed, remaining thereafter. Banks and trade associations of banks consistently place anti-credit legislation at the top of their agenda.
Because of their status as not-for-profit, member-owned financial institutions with no source of secondary investment capital, the credit union in the US is exempt from federal and state income taxes (but not from other forms of taxes, such as salaries, sales, or property taxes). Members of credit unions themselves pay income taxes on dividends earned through financial participation in credit unions; this is similar to the tax structure enjoyed by many banks incorporated in Section S of Chapter 1 of the Internal Revenue Code.
To expand the reach of its member services, many credit unions participate in ATM networks and joint branches. Most credit unions participate in the CO-OP Network, allowing members of participating credit unions to use nearly 30,000 ATMs at no additional cost or expense. Sharing branches is a cooperative effort whereby members of a credit union can make basic transactions at no additional cost at each branch owned by other credit unions in the network.
Parent banks and affiliates aggressively compete to provide services to credit unions through ATM networks, corporate giro accounts, and certificates of their deposit programs. In 2007, the American Bankers Association (ABA) prohibited credit union employees from attending an ABA-sponsored education seminar. This includes online classes that require registration. Under the pretext that ABA just wants to serve its members, ABA continues to try to weaken credit unions and take back market share held by credit unions.
Inter-bank credit conversion
Since 1995, more than 30 US credit unions have switched from credit union charters to charter banks. This conversion is generally initiated by a credit union leadership team, rather than a rank-and-file membership, and has created a sharp controversy in the credit union industry. Some people question whether this conversion is in the best interests of the members of the credit union, and has compared it to a joint bank savings raid in the 1980s.
Like shared savings, credit union conversion has been very beneficial for executives and directors to change credit unions. CU Financial, a consulting firm that helps the management of credit unions implement this conversion, has explained in the marketing material that if a credit union with $ 50 million in capital is converted into a share bank, under certain conditions the rewards in the "$ 1.2 million range for each director not out of the question, "while executives may also expect additional share compensation that" could lead to $ 10 million plus equity ownership for a competent CEO. "
Members of at least six credit unions have been organized to oppose their conversion management proposals, objecting that this insider's enrichment comes at the expense of members of the credit union. They point out that while insiders have made unexpected profits, most members lose their holdings without compensation, and face worse levels and costs after the conversion. The interest rate comparison shows that credit unions that have been converted to banks now charge more members for loans, and pay less for savings. Member groups have included Save Columbia Credit Union, Save First Basin Credit Union, Save Tech CU, and DFCU Owners United.
The National Center for Trust Members is a non-profit consumer protection organization "set up to support members of credit unions who are trying to convert to a bank." Coalition Option Charter Credit Union is an advocacy group to change credit unions. UC Berkeley Professor of Financial Institutions James Wilcox is an expert who has released a number of studies on this issue. His findings are summarized in the Credit Union Conversion: Ripe for Abuse... and Reforms, published in Credit Union Times July 2006.
See also
- American Credit Union Museum
- American Credit Union Mortgage Association
- Roy Bergengren
- Connection ties
- The Credit Union National Society
- Edward Filene
- The history of the credit union
- List of credit unions in the United States
- Dora Maxwell
- Credit unions in Canada
References
Further reading
- Ian MacPherson. Hands Around the Globe: A History of the International Credit Union Movement and the Role and Development of the World Council of Credit Unions, Inc. Horsdal & amp; Schubart Publishers Ltd, 1999.
- F.W. Raiffeisen. The Credit Unions . Trans. by Konrad Engelmann. Raiffeisen Printing and Publishing Company, Neuwid in Rhine, Germany, 1970.
External links
- US Credit Union - credit unions information in the US
- National Federation of Community Development Credit Unions - a trade body representing over 240 credit credit union communities (CDCUs) across the US
- Credit Union database - all credit unions in the US
Source of the article : Wikipedia
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