Overview: More than 84 million U.S. consumers are member-owners of, and receive all or part of their financial services from the nation's 9,750 credit unions. Credit unions are not-for-profit financial cooperatives, serving members who share something in common: employment, association membership, or residence in a particular geographic area. As not for profit cooperatives, credit unions generally offer more attractive savings and loan rates, and low or no fees. Surveys consistently rank credit unions first among financial institutions in consumer satisfaction.
Philosophy and Structure: Credit unions are democratically owned and controlled institutions, based on "people helping people" principles. Credit union boards of directors are elected by members; each member has an equal vote, regardless of how much he or she has on deposit. Only members may serve as directors, and directors serve without remuneration. Volunteers are an important credit union resource. Presently, more than 117,900 Americans volunteer for their credit unions, serving as board members, committee members or providing other assistance. Finally, credit unions have no outside stockholders, so after reserves are set aside, earnings are returned to members in the form of dividends on savings, lower loan rates or additional services.
Safety and Soundness: Credit unions primarily engage in consumer loans and, to a lesser degree, residential real estate loans to their members. Due to prudent lending and management practices, credit unions were not adversely affected by the economic downturn of the late 1980's, early 1990's, and last several years. Credit union capital is 10.7 percent and the equity ratio of the federal insurance fund, National Credit Union Share Insurance Fund (NCUSIF), has operated with an equity to insured share ratio of at least 1.25 percent for twelve consecutive years.
Insurance Fund: Since 1984, credit unions have operated their own federal deposit insurance fund on a pay- as-you-go basis. In that year, credit unions voluntarily deposited 1 percent of their insured member savings in NCUSIF, to bring its equity ratio up to 1.0 percent. This recapitalization resulted in a one-time reduction in the federal deficit. Each year, credit unions deposit sufficient funds to ensure that the fund's equity ratio is maintained at or above 1.2 percent. While the NCUSIF is backed by the full faith and credit of the U.S. Government, the structure of the insurance fund ensures that only if all of the capital in the credit union movement were exhausted, would any taxpayer funds be spent on credit unions. Like other deposit insurance funds, NCUSIF protects member deposits to $250,000. The voluntary recapitalization of NCUSIF before problems occurred, and the mechanisms in place to keep the fund highly capitalized, illustrate credit unions' commitment to safety and soundness.
Regulation and Supervision: Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA), an independent agency. NCUA's three board members are nominated by the President and confirmed by the Senate. State chartered credit unions are regulated by their state credit union department. NCUA administers NCUSIF, and all federally-insured credit unions are subject to insurance examinations as well. No taxpayer money is used for regulating and overseeing credit unions, as all activities of NCUA and NCUSIF are funded by credit unions.
U.S. Organization: Overall, 90 percent of credit unions, both federally and state chartered, representing 93 percent of total credit union assets, are affiliated with the Credit Union National Association (CUNA), and its 50 state-based affiliates (leagues). CUNA maintains offices for fee-based services in Madison, Wisconsin, and the offices of the president and governmental affairs in Washington, D.C.
Market Share: Credit unions are a small, but constant presence in the financial services industry. Credit unions held 2 percent of household financial assets as of June 2003, according to Federal Reserve data, and have held a share below 2 percent since 1980.
Political Involvement and Grassroots: After the massive grassroots mobilization that turned credit union members into credit union activists and led to the successful passage of H.R. 1151, the Credit Union Membership Access Act, credit union leaders vowed that we must never again find ourselves in such a life-threatening situation. It was decided that creating a permanent political and grassroots infrastructure in the credit union community was of utmost importance and over the past five years, CUNA has set out to do just that.
CULAC, CUNA’s political action committee, continued to grow in the 2002 election cycle, disbursing over $2.1 million to credit union friendly candidates. During the 2002 campaign season, credit union volunteers were involved in every level of campaigns, hosting fundraisers, organizing phone banks, running Get Out The Vote campaigns, and publishing voter guides. In the first half of the 2004 election cycle, CULAC contributed over $900,000 to federal candidates and committees. CUNA continues to help credit union members be involved politically by working with state leagues to conduct campaign schools across the country.
Through CUNA’s popular Hike The Hill program, credit unions have also maintained a constant grassroots presence on Capitol Hill with regular visits to Washington by league and credit union staff. Visits to members of Congress have been very beneficial as issues like bankruptcy abuse, regulatory relief and reauthorization of the Fair Credit Reporting Act have been debated on the Hill. Many credit unions have also used this opportunity to educate their members of Congress about credit unions, using their Project Differentiation Statements of Commitment as a tool to demonstrate how our commitment to our members makes credit unions stand apart from other financial institutions.
Project Zip Code is another innovative tool in credit unions' political arsenal. Project Zip Code is a software program, developed by CUNA, that is run by each credit union and which counts the number of credit union members in each state and federal legislative district. The program loads counts for each district to a central web-based database where the numbers are merged with totals from other credit unions that have run the program. By the end of 2003, over 44 million credit union members had been identified by Project Zip Code. Already an important advocacy tool, CUNA hopes that even more credit unions will participate in Project Zip Code in 2004, identifying more than 50 million members and making the data presented to elected officials even more powerful.
With the help of CUNA and the Leagues, credit unions have more opportunities than ever before to make a difference in their future. A full array of political activities is presented in a checklist brochure developed by CUNA and the American Association of Credit Union Leagues, the "9 Steps to Political Effectiveness."
Promoting Economic Development at Home and Abroad: The credit union philosophy of "not for profit, not for charity, but for service" is illustrated by credit unions' commitment to fostering economic development and helping individuals attain self-sufficiency. CUNA and its members support the development work of the National Credit Union Foundation, a $350 million philanthropic institution.
CUNA devotes 7 percent of every dues dollar from affiliated credit unions to international credit union development, through the activities of the World Council of Credit Unions (WOCCU). WOCCU delivers technical assistance to credit unions, national associations of credit unions and regulators. WOCCU is implementing 17 programs to strengthen credit unions and create an enabling environment in Africa, Asia, Central Asia, Europe and Latin America. Credit unions in 93 countries are a stabilizing force that gives diverse peoples the opportunity to practice democracy within a member-owned organization. Credit unions stimulate economic growth by offering members safe and affordable access to credit and savings services.
Copyright © 2004 - Credit Union National Association, Inc.