Difficult Times at Our Credit Union

It says he didn't want to do that. That "predatory lending" was all he felt the regulators would allow from him.

Where the laws are more relaxed, credit unions can be competitive. The Desjardins credit union (technically a federation of credit unions) based out in Quebec is a good example, they have 5.8m members and 254B$ of assets. They even have branches in the US, but those are chartered as banks and owned by the federation.

That said, it's hard for a cooperatively structured to be nimble and the bureaucracy and internal politics are legendary.

> But the NCUA wouldn't allow him to set interest rates lower

That indicates that those rates aren't actually predatory at all, but required in order to defend against default.

Which really isn't all that surprising: in the case of payday loans and such, there are many operators, and anyone who could lessen his profit-per-loan could very easily snap up a great number of customers, increasing his net profit. That no-one has done this indicates either collusion or that the rates are fair.

I posted a similar reply in the other CU thread, sorry for the repetition.

You can only draw that conclusion if you put on blinders and look at it one-dimensionally. Lots of things happened around the same time that NCUA was founded. Visa had turned into a member-licensing system, and consumer credit was become much easier to get. Computerization started happening and made banking operations more scalable.

The bread and butter of credit unions were small, workplace communities that offered savings and small loans. Most didn't even offer checking accounts. In the days when many blue-collar workers with variable wages were unable to get bank credit, they offered a accessible way to get small personal and secured loans and save. My father in law was a fireman, and there was a department credit union. The firehouse captains would come around with a boot and envelope on payday to collect deposits. New folks on the job would get loans for uniforms and boots in advance of reimbursement by the department. To 18 year old firemen in the 1960s, no consumer credit was available.

Now, consumer credit is trivial to obtain, so that market is drying up.

You also have to look at small credit union operations. When they started diversifying into stuff like auto-loans, many began to fail because they weren't equipped to handle the more sophisticated business model. They were, after all member owned cooperatives doing small loans. NCUA ended up holding the bag for those lost deposits, and tightened up standards, which in turn led to more CU shutdowns and mergers.

A very similar story applies to the former bedrock of american banking -- the small savings & loan. As their business because commoditized and the commercial banks consolidated, their oxygen got cut off.