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Do Credit Unions Enjoy An Unfair Advantage In Their War With Banks?

Thursday, May 9, 2013 - 8:15 AM
In the battle for retail consumer financial services, have community charters and federal tax breaks tilted the competitive advantage in credit unions’ favor? Two researchers from the Federal Reserve system take a look.

Richard Anderson, Vice President of the Federal Reserve Bank of St . Louis, and Yang Liu, a Senior Research Associate also with the Federal Reserve, examine how competition between credit unions and banks has evolved since the 1998 Credit Union Membership Access Act relaxed membership regulations for credit unions.

Do Credit Unions Enjoy An Unfair Advantage In Their War With Banks? | The Financial Brand: Marketing Insights for Banks & Credit Unions
ShorebreakShorebreak2,608 posts since
Apr 6, 2010
Rep Points: 14,135
1. Thursday, May 9, 2013 - 10:16 AM
"Membership in a credit union is governed by its “field of membership” (FOM). Each FOM is composed of one or more groups of persons who share a “common bond.” Prior to 1982, federal regulations permitted only single-group FOMs for federally chartered credit unions. In 1982, federal regulators first allowed FOMs that included more than a single occupational or associational group. Then in 1983, they permitted FOMs for individual credit unions that included both occupational and associational groups. On August 7, 1998, then President Clinton signed the Credit Union Membership Access Act, which amended federal law to explicitly permit multi-group FOMs.

Since January 1999, multiple-group federal credit unions have added 151,000 groups that contained 29 million persons at the time they were approved. Of the 151,000 groups, 89% contained 200 or fewer people, while 806 groups contained at least 3,000 people."

My most profitable RCAs have come from credit unions (SWACU, NACCU, Erie GE FCU, Pelican State Credit Union, Market USA FCU; to name a few).

While it is challenging to participate in their FOM, it certainly proves to be well worth the effort.

However, with high-rate RCAs being a dying and endangered species; the winning edge of credit unions is narrowing from my own perspectives. 

51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,426