The Impact of Credit Unions: Supporting Main Street, Not Wall Street, Since 1934

Those who know me well know that, when I’m not working my dream job in a financial cooperative, I’m probably playing my violin somewhere—a passion since I was nine. Last night, I had the enormous pleasure of performing Bruckner’s 8th Symphony. When I first got the music for rehearsal, I glumly stared at the pages and pages of tremolo in my part. Tremolo is basically a wavering tone made by rapidly moving the bow back and forth on the string. It’s a quiver of a note, and it can become rather exhausting and monotonous when done for long periods. I read the program notes. Seventy five minutes of tremolo? What? And the work features sixteen horns, including eight blaring Wagner tubas? Disclaimer: Violinists are generally used to enjoying soaring, featured melodies and spearheading the sound of a symphony-orchestra, as we see it. Nevertheless, rehearsal after rehearsal, my love for the Bruckner grew (along with my stamina). Last night, the thundering horns behind me gave me goosebumps. It was magnificent, powerful, and purely epic to be a part of. The tremolo I played for the majority of seventy five minutes wasn’t fruitless. It was an underlying, impactful beauty that supported a roaring engine of breathtaking music. The final movement of the symphony was punctuated with an immediate standing ovation and unabashed enthusiasm from the audience. It had been a phenomenal performance. I’d perform it again in a heartbeat, tremolo and all.

Now let’s move to the other passion I mentioned: credit unions. What? Just bear with me on this. As a reminder, credit unions are not-for-profit financial cooperatives. They’re owned by their members. Unlike banks, credit unions don’t have stockholders to please with profits. The only people credit unions need to please are their members… who are their owners. In other words: you. For that reason, everything a credit union does is for the benefit of its member-owners. Credit unions are governed by democratically-elected boards of directors. Boards are elected from the membership to serve the membership. In other words: you. No matter how big or small a credit union is, that fundamental structure remains the same.

Curious how it all started? It was under FDR in response to the Great Depression. The nation was in a period of immense need, and workers who shared common bonds pooled their meager funds together to lend to one another. The first credit unions were quite literally in lunchboxes of carefully counted, crinkled bills from trusted coworkers. My own credit union started in the desk drawer of a teacher. From such humble beginnings, credit unions have grown to over 105 million members in the United States. Those lunchboxes of pooled money have gotten considerably bigger and more sophisticated, but those noble roots of people helping people remain true. We still accept deposits from folks and turn those deposits into loans to others. Remaining funds are wisely and conservatively invested to bring a return back to… guess who? The members. You. Those returns are used on new technology, products, services, community investment, financial education, fewer and lower fees, lower rates on loans, higher yields on deposits, and much more. We offer all of the same services as banks do, right? That’s true— but we are not banks. Our purpose is not profit. Our purpose is people.

A myth you may hear is that credit unions have gotten so large that they should be taxed just like for-profit banks. Now, remember that credit unions DO pay many taxes, like payroll taxes and property taxes. Credit unions are only exempt from income tax, because a tax on credit unions would be a tax on our 105+ million member-owners. As not-for-profit cooperatives, taxation just wouldn’t make sense. Any tax income gained by the government would be vastly outweighed by the billions of dollars in benefits that credit unions inject into the U.S. economy. Here’s a revealing chart of just how much market share credit unions have “stolen” from the for-profit sector. See that little black line at the bottom? Yep, that’s credit unions. We’re a consistent underlying tremolo to America’s thunderously massive economy.

Now, back to those benefits that I mentioned. A recent independent study by ECONorthwest analyzed the effect of having credit unions as businesses in the Oregon and Washington economies. The study revealed that these two states alone enjoyed a staggering $7.7 billion dollar economic impact in 2016 thanks to credit unions! Oregon and Washington credit unions delivered $528 million in direct financial benefit to their member-owners in 2016 via dividends, lower interest rates on loans, and higher yields on savings. That’s an average of $103 per credit union member. Credit unions clearly drive economic growth. For every one of the thousands of family-wage credit union jobs in Oregon and Washington, two more are created. Adding to these benefits is that Northwest credit unions currently have 3.4 million loans to their member-owners totaling $52 billion. That’s just in two states! Those loans buy cars and homes, meet family needs, and jumpstart small businesses. Those small businesses then have access to capital to fuel job growth on Main Street rather than going to stockholders on Wall Street. Can you see the incredible ripple effect here?

Where you put your money matters. It simply matters. More than ever. If you’d like to learn more, visit asmarterchoice.org. Tell your friends. Make an impact. Though credit unions remain a quivering tremolo at the foundation of the U.S. economy, this latest study affirms that we, indeed, are creating impactful beauty for this country’s economy and for everyday American families.

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