Credit union

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A credit union is a not-for-profit co-operative financial institution that is owned and controlled by its members, through the election of a volunteer Board of Directors elected from the membership itself. Only a member of a credit union may deposit money with the credit union, or borrow money from it.

A credit union differs from a traditional financial institution (banks, savings and loan, etc.) in that the members who have accounts in the credit union are the credit union's owners. Since a credit union is a co-operative institution, its policies governing interest rates and other matters are set to benefit the interests of the membership as a whole; for example, credit unions often pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to remain in business, and this excess is used to expense loan losses and build capital.

Credit unions offer many of the same financial services as banks, including share accounts (savings accounts), share draft (checking) accounts, credit cards, and share term certificates (certificates of deposit).

The for-profit banking industry has a conflicted relationship with credit unions. Bank trade associations are opposed to the tax-free structure on earnings that credit unions enjoy and the American Bankers Association has identified the revocation of credit unions' tax-free benefits as topping its political agenda in 2004 and 2005. However, bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATM networks, corporate checking accounts, and Certificate of Deposit programs.

Credit unions in the United States

St. Mary's Bank Credit Union holds the distinction as the first credit union established in the United States and is based in Manchester, NH. St. Mary's was founded by French-speaking immigrants to Manchester from the Maritime Provinces of Canada in 1908.

Early credit unions were viewed as the “poor man’s bank” because they would extend credit to people who otherwise would not qualify for credit. In 1934, those interested in seeing credit unions grow as an industry gathered in Estes Park, Colorado. From the Estes Park Conference, the Credit Union National Extension Bureau (the forerunner of CUNA) was established. Attendees at the meeting included Dora Maxwell who would go on to help establish hundreds of credit unions and programs for the poor in her lifetime and Louise Herring, whose work to form creditunions and ensure their safe operation earned the title of “Mother of Credit Unions” in the United States.

Creditunions in the United States have traditionally employed a state/national trade association relationship that aligns credit unions with state “Credit Union Leagues” followed by national affiliation with the Credit Union National Association (CUNA) of Madison, Wisconsin. Federal creditunions may also be members of the National Association of Federal Credit Unions (NAFCU).

Credit unions in the United States may be chartered under one of two governmental authorities:
Federally chartered creidit unions are chartered under the authority of the National Credit Union Administration. Federal crdeit unions insure their members share accounts through the National Credit Union Share Insurance Fund (NCUSIF), which guarantees the safety and soundness of the credit union.

State chartered credit unions may exist in states that allow for the chartering of financial institutions under the authority of the state. Unlike Federally chartered credit unions, state chartered creditunions in some states may choose to insure their assets through either the NCUSIF, or through private insurers such as American Share Insurance (ASI).

As of the end of 2004, the National Credit Union Administration (NCUA) insured more than $500 billion in deposits at 9,000 nonprofit cooperative US creidit unions. The Federal Deposit Insurance Corporation (FDIC) insured more than $3,000 billion in deposits at 8,900 banks and thrift institutions. The NCUA and the FDIC are both independent federal agencies backed by the full faith and credit of the US government.

• Texas credit unions

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It uses material from the Wikipedia article "Credit union".

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