Credit Unions
Credit unions are chartered by the National Credit Union Administration (NCUA) or by the states in which they conduct business. Most credit unions are insured by the National Credit Union Share Insurance Fund. What distinguishes credit unions from commercial banks, mutual savings banks and savings and loans is their emphasis on a group of workers, church members or people in local areas who want to borrow relatively small amounts at reasonable interest rates from each other, and help each other save to meet these short-term needs. Credit union members usually share some local or occupational bond.
Compared to banks and other thrift institutions, the credit union chartering process is simple and inexpensive. The requirements for a charter are a showing of a common occupational, associational, or geographical bond among members, sufficient economic prospects, and an initial group of responsible leaders and sample subscribers. Chartering of new credit unions does not normally result in protests by existing credit unions because of increased competition. This is because of the common bond requirement for credit union membership; each group can normally be served by only one credit union. Governmental and private employers find that formation of credit unions is an attractive fringe benefit for employees.
In addition to chartering federal credit unions, the NCUA supervises and examines the functions of federal credit unions. Rules and regulations governing the NCUA, its activities and the activities of the credit unions it governs are consistently being created or revised. State credit unions are supervised by state authorities. Supervision, examination, and correction of credit union violations by the NCUA and state regulators are comparable to the supervision of other thrift institutions.
In the late 1970s, credit unions were authorized to participate in the residential mortgage market. Also in the late 1970s, Congress added the National Credit Union Central Liquidity Facility to the NCUA. This provides discounting and loan support to credit unions, supplementing previous mutual support and borrowing arrangements among credit unions.
Credit union failures were much less frequent in the 1980s than savings and loan association failures. This was because credit unions for the most part stayed the course with consumer loans, home improvement loans, and home mortgages, rather than venturing into risky commercial real estate loans.
Form: Sample Profit & Loss Statement
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Sample Profit & Loss Statement
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