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To: midcop402
The main bank IS our FDIC. The next layer of membership is at the state level in which there are something like 28 of these (not each state has one). Credit Unions are members of this second tier. We borrow from this second tier, this second tier borrows from this large unit. They are hurting from this economy since any funds are invested. Fortunately credit unions investments are more controlled than most banks.

When you say "main bank" and "large unit" are you referring to the Central Federal that just went bust? I may be really old-fashioned, but I always thought that CU's paid interest to depositors from interest received on loans. I thought, in the case of smaller ones I was in years ago, that they were economically self-sufficient. Then about 6 years ago my small credit union in Virginia was "bought" by a large credit union.

The board decided and browbeat the members to turn over their assets and members to the borg. I voted "Hell no". The Borg turned out to be more of a scam than a credit union. Loan rates went up a bit, but savings and CD rates went way down after the takeover. In fact I usually had a lot of cash sitting around in the old credit union and there were several times when they called me and asked if they could put some in a CD at a favorable rate in order to get their long term ratio up.

In contrast, the new credit union sent me literature on how I should send my money to their "partner" brokerage. They would make it really easy and have lots of intricate ties between the not-for-profit credit union and the very much for-profit brokerage. The loans rates then went down in 2002-4 with the credit bubble, which is the advantage of being part of the larger financial system (our members mortgages were sold as ABS). But when the larger financial system crumbles (it is arguably dead already), you die with it.

28 posted on 02/14/2009 9:25:49 PM PST by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: palmer
I may be really old-fashioned, but I always thought that CU’s paid interest to depositors from interest received on loans.

If I understand “fractional-reserve banking” enough, banks and such only receive about 1/5 of what they actually lend out, with all the rest being “loaned” by the Federal government, and with all of it being monies the bank or credit unions can loan and receive interest back on.

http://en.wikipedia.org/wiki/Fractional-reserve_banking

38 posted on 02/15/2009 1:09:09 PM PST by ConservativeMind (Who is now in charge of the "Office of the President-Elect"?)
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