Thursday, September 3, 2009

What Do CU Members Really Own?

Part of the credit union industry’s branding campaign is pushing the concept that members are owners of their credit union.

However, what is the value of this ownership?

Alex Pollock, a resident fellow at the American Enterprise Institute, in a July 7, 2006 Viewpoint article in the American Banker (paid subscription) wrote:

"It can’t be sold. It has no market value. It can’t be redeemed. You can’t borrow against it. You can’t take it with you when you switch your account to another financial institution. Theoretically, you could get a distribution of any remaining net assets upon liquidation of the credit union, but if successful, it will never liquidate."

Alex points out that if a credit union does liquidate, it is because the credit union is insolvent and there is nothing left to distribute.

So, besides receiving a dividend on your share, which is comparable to interest on bank accounts, the only thing of value is the right to vote for the Board of Directors of a credit union.

But if you ask me, there is not much value there because each member has the same number of votes – one – regardless of how much business a member does with his or her credit union.

P.T. Barnum is probably smiling from the grave.


  1. You forgot one, Keith. Credit union members can vote to prevent their pro-consumer financial institution from becoming a fee-hungry, loan-sharking bank.

  2. Credit union member-owners own more of their financial institution than do bank customers for sure. Not to mention electing the directors of the credit union (bank customers do not have that authority). Nor the ability to appeal a loan turndown to the board of directors (bank customers do not have that authority either).

  3. You know, the problem you bring up is similar to my main beef with democracy. Why should I only get one vote? Look at how much money I have.



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