Credit unions: Where the credit flowed too freely

  • Article by: CHRIS SERRES , Star Tribune
  • Updated: March 22, 2011 - 4:24 PM

Long known as lenders to the little guy, credit unions jumped into high-risk loans. Now almost half of them are losing money.

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prairiedoggyJul. 30, 09 7:18 AM

I'd been a member of City-County Federal Credit Union for years, as well as CU Companies, where I had two mortgages. When CCFC declined to increase my line of credit, I moved all of my business to a different credit union, and was happily surprised that there rate was two per cent less. Many of my co-workers have done the same. I have a credit score of 804, so have never missed a payment on any of my debt. I think CCFC lost some of their better customers, and therefore some of its income by tightening lending requirements on good payers. Seems like they've made one bad decision after another.

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MNgolfnutJul. 30, 09 9:15 AM

no comprende español (but I understand the swearing part)...carve it out of your future posts!

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prairiedoggyJul. 30, 09 9:28 AM

Here's a translation of that previous post: "Credit Unions are the best for us. There is this very well that Wells Fargo wants to f#%& pigs dollars every call! Well!" (Courtesy of Google translation tools)

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EbuddyJul. 30, 09 9:28 AM

Nobody should be surprised here. Greed is greed. Credit Unions have always tried to be just like retail and commercial banks. Over time, they've chipped away at legislation and regulation that made them different and this is what it's done for them. The bottom line: Be your own analyst, be an informed consumer!

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beachpartyJul. 30, 09 9:58 AM

named after the James Bond character and just as big of a joke. These guys had greed and stars in their eyes and are left with a pile of s. Who would want to pay that much money for a lot with the tundra wind blowing seven or eight months a year. Instead of watching golfers, of which there would be very few, you would be seeing snow blowing across the greens.

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yoyoma121212Jul. 30, 0910:17 AM

The Big Banks caused the credit crisis, along with online mortgage brokers who capitalized on people and put them in mortgages beyond their means. Go find a reliable community bank, where good customer service and responsible lending and practices still govern the bank. Smaller, community banks are the life-blood of communities, they pay their taxes (unlike their Credit Union counterparts) and are not seeking public bail-outs like the big financial institutions. Go to www.icba.org to find a bank that meets your needs!

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EbuddyJul. 30, 0910:21 AM

...so which community bank do you work for? Haven't you read the paper lately? Community banks have/are/will fail also because of the same greed, speculation and mismanagement that exists throughout the financial services industry. They are no better (or worse) than commercial banks. There are good and bad lawyers, good and bad doctors, good and bad teachers and yes, there are good and bad bankers.

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rayoflightJul. 30, 0910:44 AM

is that the reason credit unions lost money this year is that they had to repleanish the credit union insurance fund (NCUA) that was reduced when a number of the corporate credit unions _ which act somewhat like the federal reserve does for banks _ invested in high grade securities issued by the wall street financial institutions, these like so much of wall street products were not worth much. Then credit unions were originally kept out of federal bail out funds. , , , Some bad loans were made but most of their problems go back to mortgage backed securities that rating agencies improperly called safe investments. This results in their members rather than tax payers having to fix the problem.

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yoyoma121212Jul. 30, 0911:23 AM

I don't work for a bank and am not associated with employment for one. The facts are that community banks are better capitalized, have better grass-roots lobbying on their behalf, are interested in customer satisfaction and partnering with their customers. Big banks are "too big" to stay in touch with their customers, even though they have many conveniences, have over-extended themselves and received millions and billions in bail-outs. Community banks didn't cause the crisis and are there will available funds. Credit Unions don't pay taxes and are far different from the original intent of their "charter", which was to provide financial assistance and options for people of "modest" means. Your local bank will work with you, provide excellent service and be there to meet your needs. Facts are, they are better than commercial banks in those areas, as you're just a number with the bigger institutions.

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strib37Jul. 30, 0911:27 AM

About 6 years ago a friend went to a local dealership traded in his old car and came home with a new car, a lease agreement and a credit addendum for a loan note (not the lease contract) saying it was subject to final credit approval. Since the old loan balance exceeded the trade in value of the car, the dealer rolled that into the lease. Then came a phone call saying there was a problem with the paper work. We looked this up on the internet under scams so he knew they were going to tell him that the deal had not been approved by the "lender" and make him pay more -- except that you can't pull this scam with a lease. So he parked far away, walked into the dealership, and they told him that his lease was turned down. (His FICO score could have been printed on toilet paper for what it was worth.) Now the dealer must have known the lessor's FICO cutoff. That's the part that really indicates the dealer was dishonest from my perspective -- an "no" it was not DH. But, they said, "We can get you a loan with a credit union for the same monthly payment." He was happy with the deal and is still happy to own the car. Nevertheless... his credit score correctly pointed to his impending bankruptcy, so why would a Credit Union have given him a very low interest rate loan? He wasn't even a member.

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