More Information About Credit Unions

Overview: Over 87 million U.S. consumers are member-owners of, and receive all or part of their financial services from the nation's 8,000 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. Members elect credit union boards of directors; 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 120,000 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 11.1 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 1.24 percent for 14 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, illustrates credit unions' commitment to safety and soundness.

Regulation and Supervision: the National Credit Union Administration (NCUA), an independent agency, regulates Federally chartered credit unions. NCUA's three board members are nominated by the President and confirmed by the Senate. State their state credit union department regulates chartered credit unions. NCUA administers the National Credit Union Share Insurance Fund (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, nearly 90 percent of credit unions, both federally and state chartered, representing more than 90 percent of total credit union assets, are affiliated with the Credit Union National Association (CUNA), and its 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 1.8 percent of household financial assets as of December 2004, 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.

The Credit Union Legislative Action Council (CULAC), CUNA's Political Action Committee (PAC), continued to grow in the 2004 election cycle, disbursing a record $2.4 million to credit union friendly candidates, ranks it the 11th largest PAC in the United States and the 7th largest among trade associations, according to the Federal Election Commission. During the 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. 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 2004, over 54 million credit union members had been identified by Project Zip Code and almost 2,400 credit unions had participated. Already an important advocacy tool, CUNA hopes that even more credit unions will participate in Project Zip Code in the coming years to identify more members and make 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 15 development programs to strengthen credit unions and create an enabling environment in Africa, the Middle East, Asia, and Latin America. Credit unions in 90 countries are a stabilizing force that gives more than 136 million 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.

Statistics: (as of December 2008)
Number of U.S. Credit Unions: 8,147
Consumer Member-Owners: 92.5 million
Assets: $834.4 billion
Loans: $585.2 billion
Surplus funds (Cash, government securities and financial institution deposits): $214.5 billion
Consumer Savings: $699.6 billion
Capital to Assets: 11.0%

Source: Credit Union National Association http://www.cuna.org/press/basicinfo.html