Credit Union Information
As not-for-profit financial cooperatives, credit unions serve members who share something in common: employer, association membership, or residence in a particular geographic area. Surveys consistently rank credit unions first among financial institutions in consumer satisfaction.
Philosophy and Structure
Credit unions are democratically owned institutions based on the principle of "people helping people." Members elect boards of directors; each member has an equal vote, regardless of how much he or she has on deposit. Only members may serve as directors, and directors serve without remuneration.
Presently, nearly 80,000 Americans volunteer for their credit unions as board members, on committees, or in other capacities. Credit unions have no outside stockholders, so after reserves are set aside, earnings are returned to members in the form of dividends, lower loan rates, or additional services.
Difference from Banks
Credit unions’ core values and structure are very different from those of banks. Members are not just customers; they are owners, with a say in the future of the credit union. In addition, credit unions’ not-for-profit status means that all earnings are returned to the members in the form of attractive rates and low fees. Banks, on the other hand, exist to make a profit for shareholders, so their definition of success is different.
Credit unions receive charters through either the federal or state government. Overall, nearly 87 percent of credit unions are affiliated with the Credit Union National Association (CUNA), the industry’s premier national trade association, and its state-based affiliates (leagues and associations).
Credit Union Association of New York
As one of the largest credit union trade associations in the country, the Credit Union Association of New York promotes the health and well-being of the credit union movement at the national, state, and local level. With a staff of more than 140 people, the Association serves its members in four essential areas: Outreach, Regulatory Compliance, Member Services and Governmental Affairs. Its affiliated businesses include Covera, CUC Mortgage, Universal Sharing Network (UsNet) and the New York Credit Union Foundation.
Safety and Soundness
Due to prudent lending and management practices, most credit unions have not felt the adverse effects of recent economic downturns.
Since 1984, the credit union industry has operated its own federal deposit insurance fund (the National Credit Union Share Insurance Fund, or NCUSIF) on a pay-as-you-go basis. Like other deposit insurance funds, NCUSIF protects member deposits to $250,000.
Each year, credit unions deposit sufficient funds to ensure that NCUSIF’s equity ratio is maintained at or above 1.2 percent. While NCUSIF is backed by the full faith and credit of the U.S. government, taxpayer funds would be used only if all capital in the credit union movement were exhausted. This structure illustrates the unwavering credit union commitment to safety and soundness.
Regulation and Supervision
The National Credit Union Administration (NCUA), an independent government agency, regulates federally chartered credit unions. NCUA's three board members are nominated by the president and confirmed by the Senate. The agency administers NCUSIF, and all federally insured credit unions are subject to insurance examinations as well. The regulation and oversight of credit unions involves no taxpayer money, as the credit unions themselves fund all activities of NCUA and NCUSIF.
Regulation of state-chartered credit unions in New York is the domain of the New York State Department of Financial Services.
*updated Sept. 2013