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Jane Blackstone believes in community revitalization. That's a big reason she helped spearhead Lake Oswego's move to invest 1.2 million dollars in local community banks. As the city's economic development manager, she's received many of calls of interest from other cities in Oregon. She says the idea is pretty simple: give community banks — and businesses — a much needed lift in the midst of the recession.
She's quick to point out that this decision didn't have anything to do with an anti-big bank sentiment, it's just part of the city's overall stimulus plan.
Credit unions might be able to enjoy more of those types of investments in the future, if Governor Kulongoski signs a bill that would allow credit unions to accept municipal funds over a certain amount. By and large credit unions have fared better than many banks but some are struggling in this economic climate. And a few have been victims of their own success — finding that they have too many deposits and not able to make enough loans.
Do you bank at a credit union? Why? What do you like about it? Are there any disadvantages? Do you bank at a big national bank or a smaller one based in your community? What are the factors that you consider when choosing? What difference does it make that your money stays in your city or town?
- GUESTS:
- Jane Blackstone: Economic Development Manager for Lake Oswego
- Troy Stang: President and CEO of the Credit Union Association of Oregon
- Linda Navarro: President and CEO of Oregon Bankers Association
- Eric Bowman: Chair of the Board of TULIP Cooperative Credit Union in Olympia, Washington
Tagged as: banking · credit unions
Photo credit: Refracted Moments™ / Creative Commons
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Penny,
Have you ever thought about WHY your credit union is able to pay higher interest rates for savings and correspondingly low rates on lending products? It's because they don't pay taxes on income.
So in reality, the teacher's credit union down the street it part of the problem, rather than the solution, when speaking about shortfalls of our education budgets.
Originally, there WAS a place in the market for such financial institutions. Their membership was limited and worthwhile. Now, as long as you're breathing and live within 60 miles of a credit union, you can feel free to join and reap the benefits of tax paying citizens.
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"Have you ever thought about WHY your credit union is able to pay higher interest rates for savings and correspondingly low rates on lending products? It's because they don't pay taxes on income."
Oops, someone misinformed you.
The truth is that CUs don't pay outrageous unearned and undeserved profits to their greedy shareholders for not doing any work.
Happy to clear that up for you.
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For my wife and I decisions about banks, CU's and the like are a matter of convenience, not investment. Funds we may need to access within 3mos are in a nation-wide bank as accessability to funds and services wherever/whenever we are is a priority. Funds not needed within 3mos are "laddered" into investments with greater returns.
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I used to be a big bank customer 20 years ago. They treated me as if my tiny assets were a nuisance for them to track. They charged fees for everything and paid poor savings interest rates even back then. When I wanted to buy a house they treated me as if I'd contracted Bubonic Plague.
I transferred my big bank accounts to a local credit union and have (almost) never looked back. Yesterday I went to a big bank for the first time in 13 years to convert foreign currency back into U.S. dollars.
My credit union has always been helpful and responsive to my banking needs. Especially helpful is the lower interest rate charged for VISA cards. I think credit unions are mandated to charge less interest on credit card debt than big banks.
I like the idea that if I use a community-oriented bank, my savings might be loaned to local businesses and families. The money might enrich my community instead of a fat cat's yacht in Florida.
But now I only keep minimal funds in savings and checking. Equity investments have replaced my "savings" account.
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Below find two excellent articles on the benefits of, and growing movement for, publicly owned banks:
The Growing Movement for Publicly Owned Banks - Ellen Brown - YES! Magazine 3/18/10
http://www.commondreams.org/headline/2010/03/18-7
How the Nation’s Only State-Owned Bank Became the Envy of Wall Street - Josh Harkinson - Mother Jones 3/27/09
http://www.motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-owned-bank-became-envy-wall-street -
In a recent survey of local Oregon banks, vitually all of them said that deposits are up...way up in some instances. But, many do not want more deposits because they are considered liabilities and the banks need assets to balance the sheet. Some say they need a TARP for local banks much like the national banks received to get these assets. What does Linda say about this?
Nancy in Portland
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Yes, deposit accounts are considered Liabilities on the bank's balance sheet, but the cash is an asset, so every time you make a deposit or withdrawal, unless they make an error, the bank's balance sheet stays in balance.
By the same token, when a bank makes a loan, they are merely swapping one asset (cash) for another (note receivable). Again, the balance sheet remains in balance.
When a loan is repaid with interest, the cash received in repayment is an asset, and the amount of that which is interest is Revenue (something all businesses need in order to survive). Again, the balance sheet remains in balance.
What they really want is to increase their ratio of assets to liabilities. They wish to have more than enough assets to satisfy their liabilities, and to maintain enough reserves to stay in compliance with the regulations that they operate under.
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I've had great experiences with my banks and chose my banks based on the services they provided and convenience the offered. I've had good luck with my banks - both large and small.
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Jane Blackstone highlighted how banks give back to their communities. I think it is interesting that the media criticize banks and everyone wants to jump on the bandwagon. I realize there have been difficulties at some banks, but my experiences with banks have been very good. Banks give back to their communities - through sponsorship of communities events, coming in to our kids classrooms to teach lessons on financial educacation, etc. I hear on the radio all the time about different community events banks are sponsoring, see in the newspaper the support they give to non-profits, but still, the main media messaging is negative. I've been involved in a number of community organizations that have benefited from the investment that banks have made in my community. I think it is time to recognize the role banks play in partnering in our communities.
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All of those activities are tax write offs for PR and advertising, the banks fidiciuary responsibility is to their shareholders, not their customers or "community". People need to look beyond the lipstick on the banking pig.
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We left the "Banks" in the 70's and have been well served by our CU, the One that supports OPB.
Why anyone would use a bank and then choose a nonlocal bank is eluding me but whatever floats your boat.
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I will never use a bank again since I joined my Credit Union over 15 years ago. I have even received calls from bank personel when there is suspicious action on my account. THAT is personal service. Plus I have no fees attached to my checking account and can use their free Bill Pay service. This will be invaluable to me when I retire next year.
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Banks, whether national, regional or local can only lend money to qualified borrowers. Also banks have a fiduciary responsibility to its investors or stockholders to maximize profits. Deposits by the City of LO in a local bank will not increase the number of qualified borrowers. Jane Blackstone has yet to explain why a local bank with LO's deposits would loan more money in the community. The idea sounds good but has no basis in fact. If The City of Lo wants more economic development it should directly loan money. The city will then assume risks that bank can't.
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The idea that a large bank like Wells Fargo is a strong community partner is laughable. Banks like Wells Fargo have terrible buisness practices. If a customer is down on his or her luck and happends to overdraw their account the person is hit with massive fee's that get larger each day which makes their financial situation even worse causing the customer to be burried in anothother layer of debt.
Banks Like Wells Fargo are able to get away with these practices because of their size. The only reason a smaller bank doesnt take advantage in the same way is because they don't have enough members to get away with it. We are kidding ourselves thinking that if given the chance a localy owned bank wouldnt try to expand and do the same things that larger banks do.
Keep your money in a credit union at least then you have a little bit of control and will recieve some accountability from the people you are trusting your money with.
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Bankers are thieves! Usury is against Christian doctrine. Though I am not religious, I understand most Amerians are Christians. I have not used a bank for the past 15 yrs, or since I discovered CUs.
Banks gouge customers with excessive interest rates, pay almost nothing for the use of their deposits, then when their greed and stupidity break the bank they turn to their victims (taxpayers) to bail them out. The bribed politicians do as they are told by Wall Street . The banksters thus diddle the citizenry twice, stealing from us both times.
I don't remember the great depression, but my parents did, and my father never, ever borrowed a penny from a bank. He saved, ran his own business successfully, owned two houses and never borrowed a cent from a banker.
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I've used local credit unions, regional banks, and large national banks over the years. The best part of the local credit unions is the customer service and the stability in lending and customer service policies. In my experience, I've been able to reach my credit union's customer service people on the phone much more readily, and once I reach them, find it much quicker to get help. And if something needs to get escalated, they are clearly bureaucratic.
An advantage of the banks are their larger and more ubiquitous ATM networks. In the past, I might have mentioned some other advantages of the large banks, but now I'm not so sure there are any when it comes to consumers. Perhaps they have advantages when it comes to business services.
I remember looking at mortgages in 2006 and wondering why the local credit unions weren't offering rates as low as the banks, and options as diverse as the banks (and the others offering mortgages). Back then, I was glad that the banks seemed so innovative in the options they offered their customers. In retrospect, now that our economy has suffered for several years from the excessive innvotaions by the banks, I've come to appreciate the credit unions more and more.
Unfortunately for me, a credit union I've been moving more of my business to lately has just announced some chances that suggest it may not have learned the lessons of the past few years. First Tech Credit Union just announce it is becoming a federal credit union and merging with, of all things, a California credit union:
http://firsttechcu.com/learnmore.html
I'd be interested in learning what the consumer difference is between a federally chartered credit union and one that is state chartered. And given the events of the Great Recession, this decision to merge with a bank serving the volatile mortgage and business market of California has me thinking of shopping for a different credit union.
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Hey, Tony, if you're in the Eugene/Springfield area, Oregon Community Credit Union (which is morel ike a bank, unfortunately) and SELCO Community Credit Union, and Northwest Community Credit Union are all accessible to you, as long as you live or work within their community area.
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SELCO is in Bend too and I think maybe Salem, you can check.
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Hi Tony, I saw your post and work with First Tech. Here’s the big difference between state and federally chartered credit unions: Federally chartered CUs operate under the Federal Credit Union Act and the NCUA is the primary regulator for these CUs. State chartered CUs are primarily regulated by their state regulatory bodies but they also have regulations by the NCUA. Both state and federal CUs are member-owned and there are some differences in how state and federal charters define CU fields of membership, but the basic ownership structure and cooperative nature stays the same.
First Tech’s proposed merger is with Addison Avenue, a federally chartered credit union that is financially strong and very similar to First Tech in many ways. There is a lot more information at http://firsttechcu.com/learnmore.html. Hope this helps!
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After Wells Fargo bought First Interstate bank they got rid of the service. You could walk into the bank and there would be many people sitting at desks but if you asked for service they just pointed to a phone on the wall. So I left them.
I joined two different credit unions and finally stayed with one. I would never use a for profit bank again, that would be absolutely stupid, they charge outrageous fees and charges for any and everything they can, they're just a money suck, a drain on your accounts.
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Last week I walked into a local Wells Fargo bank with a friend while she transacted a bit of business. Just for the heck of it I asked the teller what kind of transactions the bank reported to the federal govt. He hemmed and hawed for a minute before the branch manager walked over and asked if there was a problem.
I repeated the question. The manager wearing a tight lipped smirk said that they reported every cash transaction over a certain amount. When I asked her what that amount was, she said it was against policy to give out that info. Being a onery sort I then asked her, if she considered this as a form of spying on her customers. The smirk never left her face, but she left the window never bothering to reply...not that I expected her to. Well, I suspect every banking institution is required by the same law to spy on their customers. It was the smirk that we found intolerable.
My friend is now preparing to move her Wells Fargo account to a CU she also belongs to.
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"Just for the heck of it I asked the teller what kind of transactions the bank reported to the federal govt."
"The manager wearing a tight lipped smirk said that they reported every cash transaction over a certain amount. When I asked her what that amount was, she said it was against policy to give out that info."
If memory serves, the threshold is $10,000 US. (This may have changed after the rushed passage of the USA PATRIOT Act.)
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Few folks understand how money is created. Most think the the mint at the US Treasury creates it. That is the footage you see when folks discuss money on TV. It is Wrong. The treasury only mints coins, less than 3% of our money. Private Banks create the money. What they do with that money is a concern to us all. It is not pretty when the big money center banks pay themselves $400million bonuses while our folks are driven from their homes.
Every time a private bank makes a loan They create the money from your obligation. You both promise to pay, and put up collateral. That becomes the private banks Capital. which they then can multiply due to the magic of fractional reserve banking, which is too much to explain here. It can be understood by visiting the webofdebt website by Ellen Hodgeson Brown, or getting her book by the same name.
Some people believe that the banks own the congress and as a consequence the laws favor the banks. This may be observed in the allowance of unconscionably high rates of interest, as on credit cards.
The banks in some people's view, have lobbied to constrict the laws on credit unions.
The big banks worked to repeal the Glass Steagall Act and now are combined with borkerages and insurance companies. Most Big banks, as Goldman Sachs for example which is now insured by you and me, but make most of their money trading. Same with most if not all of the big banks trade, billions in insurance.
Glass Steagall was created after the crash to separate banks (permission) from brokers (risk) from insurance (cash) otherwise you have a Casino.
That is what we have now. A Casino. The move to get money local is to get the money out of the gambler's hands in my view.
A benefit is that it will circulate more money locally.
Reinstating a law like Glass Steagall would allow us to trust big banks again.
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Recently, a friend was denied an auto loan by a local credit union. She had been a member for 20+ years, with large sums on deposit for most of that time. She had $15,000 on deposit at the time of her request, and she requested a $7,000 loan. The credit union refused to loan to her because of her credit report. Her credit report was clean -- never any problems. She has always paid cash, and had paid off her house mortgage several years ago. THe credit union refused to consider those factors.
I cannot understand why, when credit unions are having difficulty finding people to lend to, that they would turn her down and refuse to consider the circumnstances. She could have pledged part of her deposits as collateral.
Any ideas why this happened?
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Unfortunately, the credit bureaus have too much power to influence people's lives with the information they collect, typically without verifying the accuracy of that information. (Anybody who took a basic computer class will recognize this principle: Garbage In, Garbage Out.)
The other possibility that I can think of is that she had her account at one of the credit unions that is turning into a Bank.(Oregon Community Credit Union is going this way.)
I agree with you, she could have pledged part of her Share account as collateral to secure the loan (if a Personal Loan) or pledge the object of the loan (if a car or boat or other such item).
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It is a myth that credit unions loan more money at better rates. I have banked with First Tech CU for over 15 years. When I went to buy a car 2 years ago First Tech wanted 7 1/2% interest rate on a car loan. Beaverton Honda offered 1 1/2%. I had credit score of 790 at the time. Also 5 years ago my wife and I refinanced our home loan. First Tech CU could not compete with the 'evil' big banks.
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That 1.5% rate from Beaverton Honda was likely a promotional rate offered only to their best customers. As I do not have the original source documents to evaluate, I can only offer this as conjecture.
As for re-fi situations, Credit Unions are usually better than commercial banks, but owing to the fact that the big commercial banks are, well, bigger, they tend to have more resources (though not always as strong a community connection).
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Some yrs back a person I knew filed for bankruptcy. Within 2 or 3 yrs they were again inundated with card and various loan offers accompanyed by messages indicating that the bank knew of the bankruptcy, but were willing to again loan this person money. The rates offered looked to me like the going rates. This occurred about 5 or 6 yrs ago.
I wonder just how much weight finally is given these credit ratings.
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A bank is in competition with you, they want to separate you from your money by any financial scheme they can think up, like Derivatives, for instance. They are not concerned with people, by Law they are only concerned with making ever increasing profits for their shareholders.
A Credit Union is a group of your friends collaborating to help you out, to help you keep your money in your own hands.
The choice is a no-brainer.
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I would like to hear a comparison of the bonuses given to top executives of national banks, local banks, and credit unions. I find it hard to accept that the executives receiving those top bonuses in the news are really adding that level of value to their organizations. I'm told that some local banks are trying to match that kind of environment for their executives (relative to their size). I'm not aware of the compensation environment of credit unions. (They're organized as non-profits, but I don't know how that affects compensation.) Any comment?
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I don't think there is such a survey available, but one place to start is the Oregon Business Magazine's list of the state's top-paid CEOs. Of the top 40, six of them are bank CEOs. None of them are credit union CEOs. As a credit union CEO myself, I can tell you that my salary is set by the CU's volunteer board of directors, which is elected directly by the membership - one member, one vote. Credit union CEO salaries are, like others, driven to some extent by the market. But because credit union member/owners elect the board that sets the CEO salary, it's a more transparent system with reasonable controls built in. The main difference is that if you think your credit union's CEO is being paid too much, you can choose to elect a board that reflects your desire to change that.
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where are these loans? we've been turned down. sure after a period of unemployment our credit is wrecked. but it is within the lines of our current income.
Are there lending institutions that lend to people with poor credit, locally??
also we know of countless bunsiness that have had their credit lines slashed making it hard to cover payroll, etc.
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A friend of mine just bought a bike via a bike loan from a credit union...I believe On Point. I think this is a great strategy to get money circulating in the community. This is exactly the size of purchase that one might put on a credit card if a person didn't have the cash on hand. This helps people develop or rehabilitate their credit score such as teens, college students, or those who have had some black marks on their credit history in the past. With this type of economic uncertainty, people are sitting on the cash they do have, for fear of losing a job. This type of small dollar loan helps everyone by getting cash flowing again. With all the uncertainty in credit cards these days, it is important to have an alternative, and especially one that can benefit the community as a whole.
I am a credit union member at First Tech. Have not applied to them for a loan, but I am very satisfied with my fee-free accounts, and knowing that my money stays local. I have had an account with Wells Fargo since 1984 and was paying $15 a month or so with checking fees and bill pay. Now I pay zero fees and I love that. The network of credit unions here makes for easy access to ATMs...I know where they are and have not had problems accessing cash. This was one of my biggest fears when considering changing from WFB. When I walked in to close my WFB account they *then* and only then offered to waive my fees that I had been paying for 25 years. That irked me even more...I will never go back.
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After using a mix of banks and credit unions, I closed our last bank account years ago, and have no regrets. I'm excited about my CU's "rewards" program, which encourages me to spend them as donations to local service and charitable groups. Periodically, when I've accumulated enough credits to give a $25 or $50 donation, it's just a mouse-click and I'm done. I don't want or need the typical rewards-program offerings, but donating extra cash to my favorite local groups makes me feel good about my credit union and strengthens my commitment to making my community a better place for all its citizens.
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Oh, for goodness sakes, you should move your money because essentially, banks hate you, by Law all they care about is their shareholders capital gains and dividends.
Only suckers use for profit banks. Just like in Las Vegas, you lose a little bit on every transaction and you end up a loser overall. But at least in Las Vegas you can have a little fun while you're losing and maybe get comped a few drinks, a meal, or even a hotel room. But with banks, you just lose and it is no fun at all.
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As far as I know, my credit union is not paying lobbyists in Washington to defeat the financial regulation we so badly need.
Thanks
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One of the best ways to keep money local is to follow the example of the State Bank of North Dakota. North Dakota has not been affected by the financial crash that the rest of the country has suffered as consequence.
A State owned bank is not a monopoly, it must compete, but it can earn benefits that lower all inhabitants tax costs by using the money that have been going to casino banking and the trading of Credit Default Swaps(CDOs)
A benefit, that instead of the interest going to bonuses, it goes to pay for roads and schools, another is that the money Stays in the State. That means local farms and businesses can get loans.
I could be wrong on what follows, but I did not believe Credit Unions could make business loans. That may have changed recently, but that is the way it used to be.
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I am currently searching for a new financial institution for my personal and business assets. Through my search, I discovered that small to medium sized local Credit Unions have the best offerings. Free checking and online banking and bill pay are the 3 main services I plan to use. 'Free' checking is tricky, because all financial institutions charge fees for many little things like non-sufficient funds instance.
The medium to large Banks in the area have high service fees for things like non-sufficient funds of $20-30 per instance, or a $20-30 fee for transferring money from savings to cover a checking purchase.
Unfortunately the larger Credit Unions like First Tech have steadily raised their service fees to be equivolent to Banks. Although I am a part owner of my Credit Union, the larger they are, the less my one voice counts.
I have now narrowed my search to small to medium sized Oregon local Credit Unions such as Rivermark, Unitus, Advantis, Northwest Resource.
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Consider SELCO if you are in their area, they are the best that I have ever experienced. The nicest people, the best service, just the best.
http://www.selco.org/
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Bankers think they have a "Divine Right" to make profits from you, that you exist to serve them and keep filling up their hog trough with your money.
Credit Unions are the exact opposite, they exist to serve you and help you keep your money in your own pockets.
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Lighten TF up dude... we get it, you like CU's... but they aren't the best soluiton for everyone and those folks are neither stupid nor naive... a little tolerance please. :-)
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People get no tolerance from bankers, so why should anyone give bankers any tolerance in return?
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@rethomas
Let me add that I have the same level of respect for bankers that I have for meth dealers, none!
Neither one contributes to our society, they are both parasites and they both do damage to our societies.
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Bankers don't contribute to society? You are mistaken sir. If anything, it's your dear credit unions that are absent-minded participants. Do you forget that they don't pay taxes? That's right, you pay more taxes because your credit union won't.
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Re: the post above - Credit unions do pay taxes (property, payroll, etc.). They are exempt only from the corporate income tax because they are not-for-profit cooperatives owned by their members. Another reason for the exemption is their capital structure. Unlike banks, credit unions may receive no sources of secondary capital such as stock or outside investments, and they are strictly limited to conservative investments, the vast bulk of which consist of loans to other members. Banks can take local deposits and invest them virtually anywhere. But because credit unions may serve only those in their community or affiliated organizations, more CU deposits are kept circulating in local economies. Both types of organizations play valuable roles in their communities, and very few of them shirk that role. What a bank or a credit union does with money in its community has mainly to do with its structure, ownership and mission. Fortunately, consumers have a choice about which model they choose to support.
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David Bean's explanation of how money is created is incorrect. Private banks do not create money; the Federal Reserve creates money. The Board of Governors of the Federal Reserve decide hwo much money should be in circulation and maniputates the money supply through various means such as setting the reserve requirements for private banks. The fractional reserve system multiplies the available money to meet liquidity demands in the general economy. Further, collateral for a loan does not become capital for a private bank; banks must raise capital from investors, just as any other business. Mr. Bean is correct in saying that coin and currency represents a small fraction of the money supply; most money is in the form of bank deposits.
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Comments are now closed.
My partner and I keep our money in a Not-for-profit Credit Union because they have higher interest rates for savings than do any of the commercial banks and, correspondingly, lower interest rates on loans than any of the commercial banks.
Incidentally, during this whole mess of the last two years, have you heard of any Credit Unions failing, or experiencing an avalanche of mortgage defaults? Neither have I. On the other hand, most of the large regional and national banks have had problems. Lehman Brothers, Bear Stearns, Countrywide, IndyMac, WaMu, Wachovia, Bank of America, Chase...
Yes, I suppose there are benefits to using a large national bank like B of A, as you would be able to use the services at any branch from coast to coast, but one can access their Credit Union account from thousands of ATM's, not to mention the shared branching program.