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#47586 - 12/12/02 10:24 PM Re: Credit Union vs. Banks-now OT
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That is good news! By the way, I worked for awhile in the Riverside area, but I got out of California alive and now the air is fit to inhale, but I'm not saying that Riverside is not a wonderful place for some people.

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Audit
#47587 - 12/13/02 06:59 PM Re: Credit Union vs. Banks-now OT
MackenzieS Offline
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In reply to:

In reading this thread, however, one ominous chorus seems to be: "If the regulators stay off your back about troublesome things like COMPLYING with a regulation, then the customer is happier, the employees are happier, management is happier, and everyone makes money."

Why do I find that thought disturbing?






I think the interpretation is more that it takes money to comply with the mountain of regualtory requirements. If banks could take to the bottom line a fraction of what we spend each year to implement and maintain all of the regualtory requirements, naturally all banks would benefit. I don't believe the consensus is to toss out the compliance mandates, it is just a costly process. Having said that, I think we all know that due to these burdensome requirements we facilitate sound financial institutions and the 80's are less likely to happen again.

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#47588 - 12/13/02 08:40 PM Re: Credit Union vs. Banks-now OT
Anonymous
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I made the switch to the CU world this year. I see some differences however the NCUA examiner's I have already experienced weren't any different than Fed or state examiner's in the banking world. It might make a difference that our president is also a former banker. We run more like a bank than some of our counterparts, in that we do more business loans and have small business accounts. I don't miss the large commercial accounts. We are a state charter and are a Community CU which is very different than a CU that is connected by a sponsorship of a big business - like GE might hava a CU for their employees. Those groups have a harder time because of their field of membership. I'm not seeing any major changes in regs except Reg D, because of ATM/Debit cards that were set-up against Savings accounts. You can't just change a savings account to a transactional account because of the specifications of the savings account being the primary account. The other major difference is we don't process in a POD world, which effects Reg CC and availablity however that might be just they way we chose to process. I don't know if all CU's process the same way. I don't have any regrets and I've worked in banks, FSB's and now a CU. I think the leadership of the institution will make all the difference. Good luck.

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#47589 - 12/13/02 08:54 PM Re: Credit Union vs. Banks
Anonymous
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A community charter may very will serve the low to middle income community that as a former banker I can say no bank wants to service. We still make those small (tiny in a bankers eyes) that meet the needs of the membership and that they can qualify for versus turning them away. It's a struggle some days, but so is banking. Let me say again look at the leadership of the institution and then make up your mind. In defense of the director's you can't convince me that all bank directors understand the regs or care. They're getting paid to be at the meeting. CU directors give up their time to assist and are willing to learn what they must. Don't get caught up in the tax thing. I don't think CU's will be tax free forever. I'm sure that ABA will never give up and eventually things will change. Good luck

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#47590 - 12/17/02 04:29 PM Re: Credit Union vs. Banks
Anonymous
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I think you hit the nail on the head! I too left banking for a short time and entered credit union life - now back to banking. Having been a Compliance Officer for so long, I found the lack of regulatory oversight in the CU very difficult to adjust to. Yes, they are supposed to follow the same regulations as banks, but the oversight is not there at all. So, trying to get the staff to do it right was very difficult - you often heard, "Well, we never got in trouble for that before and we've been doing it this way for years. We are not going to change until the examiner says we have to." Well, you could practically put the errors under the examiners' noses and the CU would still come away unscathed. It was frustrating. As a consumer, now that I have seen that, I am too afraid to do my financial business at a CU. Yes, the rates are better, but there's nobody around to make sure they are doing things right.

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#47591 - 12/27/02 06:36 PM Re: Credit Union vs. Banks
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Is the dearth of private deposit insurers for CUs an issue they should be concerned about?

Are there private deposit insurer for commercial banks?

article from American Banker, posted here in full for discussion purposes:

ASI Into Md. As CUIC Winds Down
From: The Credit Union Journal
Monday, December 23, 2002



State regulators with the Division of Financial Reulation said last week they have approved an application from American Share Insurance of Dublin, Ohio, to offer private deposit insurance to the state's 11 state- chartered credit unions. Six of those credit unions are already covered by CU Insurance Corp.

The action by state regulators here follows approvals by officials in Michigan and New Jersey last month to allow ASI to provide excess share insurance, coverage for accounts over $100,000, to credit unions in those states.

As part of the introduction of ASI into Maryland, tiny CU Insurance Corp. will close down its business over the next two years and distribute its excess funds to a newly created non-profitable foundation.

Joseph Rooney, assistant commissioner for financial institutions, told The Credit Union Journal, that a new law passed in May approving an alternative private insurer to CUIC will require the wind down of CUIC and the distribution of about $3 million to the CUIC Foundation, which will help fund credit union-related activities, after sufficent funds are distributed to the surviving CUIC credit unions to obtain insurance coverage elsewhere. CUIC currently provides coverage for just five of the Maryland's 11 charters, but one is in the process of converting to federal insurance.

The demise of CUIC will leave ASI as the sole surviving private deposit insurer for CUs from a group that once numbered more than two dozen.


Thomson Financial Media
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#47592 - 12/28/02 12:12 AM Re: Credit Union vs. Banks
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Why should we be concerned, in your view? Are you working for a CU? Excess insurance is just another strange thing about the non-taxed CU world - if they are going after the little guy, why do they need excess deposit insurance anyway? Answer: They are not going after the little guy.

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#47593 - 12/30/02 03:41 PM Re: Credit Union vs. Banks
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no, I do not work for a credit union -- and there is no reason for banks to be concerned -- was just sharing information about our competition....
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#47594 - 12/30/02 04:16 PM Re: Credit Union vs. Banks
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The use of excess insurance is an interesting element within the CU world, they can afford it.

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#47595 - 12/30/02 05:09 PM Re: Credit Union vs. Banks
KSherrell Offline
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Grist, where does your "conspiracy theory" go? If youíre trying to say CU's try to attract people with money, youíre right. Why is that bad?

-Kevin

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#47596 - 12/30/02 05:34 PM Re: Credit Union vs. Banks
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conspiracy theory

It's not really a conspiracy, CU's were originally created as non-taxed entities to serve that underserved that did not have access to banking services. The original mandate has shifted to the middle and upper class market with CU's actually looking to avoid the needs of the poor working class - they no longer fit the CU business plan. Of course, there are exceptions but those exceptions are few and far between.

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#47597 - 12/30/02 07:07 PM Re: Credit Union vs. Banks
KSherrell Offline
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This was an interest read...

WASHINGTON (12/30/02)--In a letter to the editor appearing in Friday's American Banker, CUNA President and CEO Dan Mica called the banking industry's traditional "gripes" about credit unions' tax status "out of touch."

Mica said too many in the banking industry "stubbornly cling to a misinformed, outmoded view of credit unions."

Mica's letter responds to a Dec. 20 letter from North Carolina Bankers Association president Thad Woodard.

"Mr. Woodard not only doesn't want credit unions to progress, he longs to return them to the days of the 1930s, when their services amounted to a passbook savings account, small personal loans, and little else," states Mica. "This black-and-white world may represent ĎA Wonderful Life' for bankers, but not for credit unions -- which would be rendered obsolete -- or their 83 million members, who would be left with fewer choices and higher costs in the financial services marketplace."

"How would Mr. Woodard react if the clock were similarly turned back on banks?" asked Mica.

Mica said Woodard seems incensed credit unions today have become more stable by diversifying their membership and offer a menu of services their members need and demand.

"He still fails to realize the justification for credit unions' tax status lies not in the scope of the services they offer or the size of their membership; it comes from credit unions' structure as not-for-profit, member-owned cooperatives -- a structure that sets credit unions apart even from mutual savings banks, which pay their directors, do not operate on a one-member, one-vote basis, and routinely use proxies that effectively limit control of the institution to a select few," explained Mica. "Far more than the tax exemption, it's their not-for-profit structure and volunteer-based governance that enable credit unions to offer lower fees, more attractive rates, and more personalized service than their for-profit competitors. That's why, according to CUNA studies, credit unions return $5 to their members in lower costs for every $1 realized in tax savings," Mica continued.

He also said Woodard does not understand that since this money goes directly to the credit unions' members, it stays (and is spent again) in the community, "an important distinction when more consumers must do business with giant out-of-state banking conglomerates."

In addition, Mica pointed out that "complaints ring disingenuous" as more banks convert to Subchapter S and eye limited liability corporation (LLC) status, allowing them to bypass taxation at the corporate level and pass through the tax liability to their shareholders.

The letter said credit unions are still bound by a host of restrictions that do not apply to banks, including tight limits on investments, capital, business-related services, and trust powers.

"Finally, Mr. Woodard again repeats the canard that credit unions are less regulated than banks, when independent studies by the U.S. Treasury have confirmed that, if anything, credit unions are more heavily regulated," said Mica.

"The plain fact is key differences remain between the structure, philosophy, and mission of credit unions and banks. These differences account for credit unions' tax status but also their superb record of member service," Mica concluded. "Maybe it's too much to ask, but perhaps in the new year the banking industry can focus on what's best for consumers rather than using hollow, timeworn arguments in the hope of thwarting competition and consumer choice."


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#47598 - 12/30/02 08:35 PM Re: Credit Union vs. Banks
Anonymous
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Having moved to the CU world justt his year, I'd have to say you have bad info. The CU that I'm with serves the low to middle income community - leaning more toward low than middle. We make loans as small as $500.00, how many banks do that anymore? Don't get me wrong there appear to be many large CU's that have moved into the same markets as banks, however somewhere in the files, I'm sure you'll find some loans and accounts that none of the banks want to fool with anymore.

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#47599 - 12/30/02 09:02 PM Re: Credit Union vs. Banks
Dan Persfull Offline
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In reply to:

"Finally, Mr. Woodard again repeats the canard that credit unions are less regulated than banks, when independent studies by the U.S. Treasury have confirmed that, if anything, credit unions are more heavily regulated ," said Mica.


I worked for a local Federally chartered CU for 3 years and the NCUA never examined the CU while I was there. Too the best of my knowledge the last time that CU was examined was either 1996 or 1997. So, as far as I'm concerned, the bold type above is the canard.

I think CUs serves a valuable segment of the market, but their Field of Membership should be more closely adhered to, however I still feel they do so with an unfair advantage. That's all I have to say about that.

In reply to:

We make loans as small as $500.00, how many banks do that anymore?


We do! Not on a regular basis, but we do accomodate the customer if we can't move them to an ODL or Credit Card.
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#47600 - 12/30/02 11:10 PM Re: Credit Union vs. Banks
KSherrell Offline
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I'd have to agree with you on that one Dan. CU's do dodge the Regulatory Bullets quite often. I fault NCUA on that one though.

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#47601 - 12/31/02 12:11 AM Re: Credit Union vs. Banks
Don_Narup Offline

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I find it difficult to believe a CU is looking to serve the "Underserved" when it includes any individual in a county of 3 million people as eligable for CU membership.

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