Credit Unions
en.wikipedia.org
en.wikipedia.org
The fact that they are non-profit cooperative institutions also makes them significantly more desirable from a political standpoint. Seems to be the "progressive" alternative to regular banking.
My wife banks with one of the big banks--pretty much everything she tries to do is a hassle. Often that involves long hold times only to be told she needs to travel into town to a branch to get something done or resolved. That's, more than once, been the point where they just outright refuse to actually help her. She pays $20/mo+ for the privilege.
I never wait on hold. Everything I've needed to do I can do online or via phone/email. When my wife's bank steadfastly refused to allow her to send me a wire transfer, my CU was the one that was willing to discuss alternatives and help us figure out how to get the money moved. When I had bad credit but had repaired my financial situation, my CU was the one that was willing to extend me credit based on the personal assessment of a real human. I've paid them $0 in fees in the last decade or so.
My wife's been telling me to get a "real bank account" for years because my CU has been halfway across the country in one direction or another most of the time we've been together and has no local branches. She still can't seem to grasp that it's not a problem when your bank is actually staffed by actual people empowered to make stuff happen. Her "real" bank on the other hand...
This lookup tool indicates there are even international locations.
CU is inept, long hold/queue times. Every transaction is a comedy of errors. They messed up my SDB 3 times. Their OLB web app once leaked private customer information about 2-3 other members into my inbox.
I aimed to totally ditch CU, but once I got the bank all set up, realized I absolutely couldn't, so now I juggle both.
What makes you think this is sufficient evidence to claim that they are no more safe than banks?
Have there been other CU failures of note since 1990? (33 years ago)
> What Is the NCUA?
> The NCUA is an independent agency that oversees the National Credit Union Share Insurance Fund (NCUSIF). This federal insurance fund, backed by the U.S. government, insures member savings in federally insured credit unions. Deposits at federally chartered credit unions are automatically insured by the NCUA, but state-chartered credit unions can opt for NCUA insurance too. Some 98% of U.S. credit unions are federally insured. To find out if your credit union is one of them, ask a representative or look for the official NCUA insurance logo in its offices or on its website.
A Credit Union is not the same as a bank, since a CU is member-owned and member-controlled.
But like, what do you know about the FDIC that you don't know about the NCUA? I suspect to most people they're both just opaque blobs of the US Federal government that insure deposits up to $250,000, and that's the limit of most people's understanding of either organization. If you're not confident in the NCUA, I'm not sure what extra information you could possibly have that would make you suddenly confident in the FDIC.
What's wrong with that? Seriously, belittling someone because they don't know about something, so therefore they'd rather avoid it, doesn't seem right either.
I know about FDIC. I understand the rules. My bank has a great explainer on their website about the coverage. I don't know anything about NCUA and I don't care to learn, because I'm already protected at the bank that I'm at.
This is what I was responding to:
> I could not tell you whether it's more or less vulnerable to market instability or bank runs than a larger bank.
There was no 'confidence'. What I said was true, it isn't FDIC insured. Geez, I'm not trying to "scare" anyone, you're making that shit up.
Now, if I'm _ignorant_ to the other ways it is insured, great, educate me, but don't be a dick about it.
Why use this sort of language?
> What I said was true, it isn't FDIC insured.
But it is a banal truth, because they are simply insured by a different agency.
> I don't know anything about NCUA and I don't care to learn
So you were motivated by apathy and content in ignorance, rather than trying to scare people, with your language. Still a bad choice because it shows that you're not seriously trying to engage in a discussion and learn about a subject.
I appreciate the irony of coming across wrong in an attempt to tell you how you came across wrong. :)
When someone tried to educate you, you responded with:
"Functionally it is declared the same in all the googling that I've done, but in practice, are they? I don't know, and personally, I don't really want to find out."
Do you see how maybe that's a bit FUD?
The rules are pretty much the same. A credit union is likely to have the same kind of explainer that tells you the same stuff, except there's magic words like 'share account' instead of 'savings account' and 'member' instead of 'account holder'. And credit unions have to have some 'affinity' requirement. Most credit unions these days just have a geographic requirement (live, work, or worship in a list of counties), but some require a connection to some company or organization, but for otherwise national credit unions, there's often a 'loophole' way to get affiliated; you can often make a trivial one-time donation to become a member of an affiliate supporting organization and then get into the credit union. There's a little bit of smoke and mirrors there, to support the creative fiction that credit unions aren't just banks, but they pretty much are. Just like banks, some are good and some are bad, some will fail in the near future, some won't, and deposits under the $250k threshold are explicitly insured. Updates to rules that affect banks usually lead to updates that affect credit unions, but it sometimes takes a little while longer.
You'll also get notices about board of supervisors elections, which you won't for a bank with stockholders, but might get for a mutual bank.
I really should move my savings to a commercial bank, where I can get 3.6%, but I haven't been inspired enough yet. Sure, the commercial bank may be making a profit, but they're giving their depositors more, and that's really what I'm looking for in a banking relationship.
4.75% on their "no penalty cd", you can pull out after 6 days.
Oh and now login is broken.
Actually in many ways the NCUA is a bit more open about their work.
Here's the NCUA informing all credit unions back in 2022 that risk assessments are changing to factor in the sharp rising interest rates affecting asset values.
https://ncua.gov/regulation-supervision/letters-credit-union...
Want to know their enforcement history? Bam https://ncua.gov/news/enforcement-actions/administrative-ord...
Credit unions are required to maintain coverage for all deposit liabilities.
So it can’t be undone by a bank run, but potentially could be undone by theft if uninsured.
So are banks.
What fraction of total deposits must be held in cash?
But this discussion is more about insurance, not capital reserves. Credit unions are required to hold insurance (coverage) on their deposits just like banks, with the same cap of $250,000 per account. Most, but not all, credit unions are insured by NCUA, backed by the US government. All federally chartered credit unions are insured by NCUA, but state-chartered credit unions are not necessarily required to be. The majority of state-chartered credit unions are also insured by NCUA, but they have the option of obtaining their insurance by other means, and some choose to use private insurers like American Share Insurance. These private insurers are usually backed by a huge reinsurer and so the risk of them not meeting their obligations is low, but arguably higher than NCUA. On the flipside, private share insurers sometimes offer higher coverage limits than NCUA. It's mostly a minor issue though as credit unions covered by other than NCUA are uncommon, and NCUA-insured credit unions prominently post the NCUA logo. Similarly, non-NCUA credit unions are required to disclose their insurer.
Federally-chartered credit unions usually use "Federal" in their name although some don't use it in their general advertising and logotype any more. State-chartered credit unions only exist in some states, but California charters credit unions and as you'd imagine there are quite a few examples in that state. There are even "dual-chartered" credit unions in some states that hold charters from both state and federal governments. This is the norm in e.g. Washington due to some banking regulation history. Older credit unions are more likely to be state-chartered as the federal system is newer than most state systems, but credit unions didn't really take off until the Federal Credit Union Act so there's still not that many of them.
So pretty much the same coverage, just a different agency.
https://ncua.gov/analysis/credit-union-corporate-call-report...
Being very local (and concentrated on one sector) didn't help SVB. Most credit unions require (or used to) you to be in some industry or union, etc to join. Like teacher's credit unions, etc. So potentially there would be sector exposure. But I think in recent years most CUs have relaxed those requirements (I know the one I'm in did) and allow pretty much anyone to join.
> From 2008 through 2012, 481 FDIC insured banks were either liquidated or merged with healthier institutions. Credit unions, on the other hand, saw 136 involuntary liquidations or assisted mergers at the hands of the National Credit Union Share Insurance Fund (their version of the FDIC), among 6,940 FDIC institutions compared to 6,815 U.S. credit unions.
Some credit unions do provide service to businesses though. So they might have similar concentration of account issues.
Stock market 'circuit breakers' that halt trading when the stock moves too fast seem to be pretty helpful. Maybe banks need something that halts withdrawals when they reach 10% of last reported deposits. (Spit ball: each depositor may withdrawal at least 10% of their current balance or last two statement balances, whichever is more, any excess is allocated on a dollar basis across the day's withdrawal requests. Some mechanism to pre-request funds so you can be sure you can wire large payments for houses, etc)
Kay: A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.
For starters, there is not a conceivable credit union equivalent to VCs telling all their companies to withdraw all they can from their bank on a single day. Credit unions can offer business accounts as well as individual accounts... but still.