Credit unions: Putting people over profits since 1909

The credit union industry got its start 114 years ago when St. Mary’s Cooperative Credit Association opened in Manchester, N.H. Today, over 135 million Americans choose credit unions to achieve financial well-being. Credit union growth has been spurred in recent decades by Americans fleeing megabanks, which have been found to often engage in unethical and illegal practices while gouging consumers of their hard-earned dollars to enrich banking tycoons on Wall Street.

For years, Americans have dealt with the consequences of risky bank behavior. The contrast in decision making was even clearer after the recent bank failures. Banks are comfortable to choose the risky path, chasing yields and losing consumers’ money, while credit unions are safe, secure, and reliable. Only about 50 percent of bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) compared to roughly 90 percent of credit union deposits backed by the National Credit Union Administration (NCUA). No one has ever lost a penny of insured share deposits in the credit union system.

The 2008 financial crisis was the result of major national banks offering unaffordable mortgages to millions of Americans – packaging them up and selling them off before borrowers defaulted. A few years later, these same banks started charging customers monthly account fees. In response, Americans banded together and staged Bank Transfer Day on Nov. 5, 2011. It’s estimated that 440,000 consumers moved their money from a bank to a credit union. Add in banks’ longstanding history of redlining, abandoning communities, making fake accounts to pad bottom lines, and more, it’s not surprising the 25 largest banks in the U.S. have accumulated over $160 billion in fines since the 2008 financial crisis. It’s also not surprising that consumers continue their flight to financial safety with credit unions and the industry’s “people first” mission.

At the National Association of Federally-Insured Credit Unions (NAFCU), we have seen first-hand how our member credit unions continue to fill the void created by banks leaving behind communities in underserved areas – the communities that need access to financial services and products the most. According to data from NAFCU, the NCUA and FDIC, since 2020, the number of national and regional bank branches in underserved areas has declined 10.6 and 9.7 percent, respectively. Meanwhile, credit unions have added nearly 200 branches across the country to provide safe, affordable financial services to communities. Over the past decade, banks have closed more than 11,000 branches. Instead of investing money back into communities, megabank CEOs choose to pad their pockets with tens of millions of American consumers’ dollars.

The recent failings of Signature Bank and Silicon Valley Bank highlight the clear difference between banks and credit unions: banks are an avenue for wealthy investors to profit using money from the average consumers; credit unions serve the best interests of American families and Main Street small businesses. A recent survey of small business owners showed they’re turning increasingly to credit unions – even before the recent bank collapses – to protect their money and because of the trust and level of service they experienced. Since 2007, credit union lending to small businesses has skyrocketed, while banks have remained stagnant: According to call report data, credit unions grew their small business loans six-fold over that period while bank lending was stagnant.

While banks take advantage of American consumers to fill pockets on Wall Street, credit unions remain steadfast in their commitment to their members’ and communities’ best interests. The not-for-profit cooperative model of credit unions allows them to offer lower interest rates to consumers, provide necessary financial services to Americans who have been abandoned by banks, access affordable capital and credit when they need it, and have peace of mind that their money is being handled with the care it deserves. Safe, secure, and reliable: that’s the credit union difference.

Contact the author: NAFCU

Contact the author: NAFCU

B. Dan Berger

B. Dan Berger

B. Dan Berger became NAFCU president and CEO on Aug. 1, 2013. He joined NAFCU in January 2006 as senior vice president of government affairs overseeing five divisions including legislative ... Web: www.nafcu.org Details