How Credit Unions Outgrew Their Down-Home Reputation
By Ben Eisen
Jason Lugo shopped around for a loan when he bought a boat this summer, but no one offered him as good a deal as University Federal Credit Union.The Austin, Texas, construction contractor took home a $42,000 Yamaha AR195 and a 78-month loan with no money down. The credit union gave him a roughly 5% interest rate, far less than what others offered. …“They are making lots of loans with high-risk features,” said Karen Petrou, co-head of Federal Financial Analytics, a regulatory advisory firm that has researched credit unions for the banking industry. “They always tried to be George Bailey’s bank and they’re not anymore.”Credit unions point out that even the largest cooperatives are small compared with the major banks. The entire industry collectively holds less in deposits than JPMorgan Chase & Co. They acknowledge that credit unions now offer loans for items that aren’t typical of a not-for-profit, but they say credit unions don’t usually offer anything that banks don’t.