Words are a powerful tool. Because we’ve accepted and established definitions and usages for more than a million words (in the English language) our lives are easier than a time before words. With words, we’re able to precisely express our thoughts, feelings, wants, and needs. It’s why we tell our children to use their words, rather than point and groan it’s clearer.
But sometimes the right word is hard to find. There are so many choices, and so many of those choices are wrong. As Adam Gopnik wrote in the New Yorker last year, there are, truly, an infinite number of ways of forming the sentence you are about to attempt, all save one of them ugly and inadequate.
This is especially true of credit union converts. Those who’ve come to the credit union industry from the banking world enter a space led by different, cooperative principles and defined by unfamiliar words.
Here, then, is help.
THE INTRODUCTORY CREDIT UNION DICTIONARY FOR THE REFORMED BANKER
| What The Banker Says | What The Credit Union Employee Says |
|---|---|
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Stockholder Banks are owned and controlled by stockholders, whose number of votes are determined proportionally to number of shares owned. Customers do not have voting rights and therefore effectively have no say in how their bank is operated. Except on Twitter. |
Member-owner –Members of the credit union are also owners. Each has one vote in electing board members and can also run for election to the board, unlike bank customers. |
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For-Profit – Banks are for-profit corporations. Declared earnings are paid back to stockholders. |
Not-For-Profit Credit unions are not-for-profit cooperatives. Earnings are paid back to members in the form of higher savings rates and lower loan rates when compared to banks. |
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Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency Depending on its charter and organizational structure, a bank may be subject to various federal and state banking regulations. The FDIC, Federal Reserve, and OCC are three such agencies that could be a bank’s primary federal regulator. State-chartered banks are also subject to the regulation and supervision of the state regulatory agency, in addition to federal regulation, which often preempt state laws. |
NCUA Created by the U.S. Congress in 1970 to regulate, charter, and supervise federal credit unions, the NCUA is governed by a three-member board appointed by the president of the United States and confirmed by the Senate. Both banks and credit unions are regulated and both agree on the need for regulatory relief. |
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Federal Deposit Insurance Corporation Created by the Banking Act of 1933, the FDIC is an independent agency that provides deposit insurance guaranteeing the safety of a depositor’s account in member banks up to $250,000. The FDIC also examines and supervises certain financial institutions for safety and soundness and other functions. |
NCUSIF The federal fund created by Congress in 1970 to insure member’s deposits in federally insured credit unions, the NCUSIF was created without any tax dollars and capitalized solely by credit unions. Administered by the NCUA, the NCUSIF is backed by the full faith and credit of the U.S. government and insures deposit accounts up to $250,000. |
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General Public Banks are open to the general public, regardless of location or affiliation. |
Field Of Membership Credit unions only accept members from specific areas and with specific group affiliations. |
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Paid Board of Directors The board of directors at a bank are compensated to make decisions in the best interest of the stockholders and account holders who do not have a vote in the decisions. |
Volunteer Board of Directors Credit unions have volunteer, member-elected board members. This gives members greater influence into the credit union, because each member has an equal vote regardless the financial relationship with the credit union. |
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Competitive Banks compete against one another for customers and resources. Because of this they are unlikely to share strategies or innovative ways of doing business. |
Cooperative By definition, this is an association of people who voluntarily cooperate for their mutual social, economic, and cultural benefit. Credit unions are an example of a financial cooperative; they cooperate with other credit unions and in some instances share ideas and resources to develop convenience and savings for its members. |
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Bailout The savings and loan crisis in the 1980s along with the financial crisis in 2008required taxpayer bailouts used taxpayer dollars to cover losses created by unsound practices. |
N/A Taxpayer funds have never been used to bailout a credit union in the United States. |
