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March 2013

Wisconsin Credit Unions
Thriving in Uncertain Economy

2012 was a successful year for Wisconsin’s cooperatively owned credit unions. According to the National Credit Union Administration (NCUA), all of the largest Wisconsin credit unions enjoyed growing home-mortgage originations and stronger balance sheets. Seven Wisconsin credit unions now exceed $1 billion in assets, including Landmark in New Berlin, Summit in Madison, Community First in Appleton, University of Wisconsin in Madison, Educators in Racine, Royal in Eau Claire, and CoVantage in Antigo, with Fox Communities in Appleton and WESTconsin in Menomonie knocking on the $1 billion door. Many of the credit unions are also seeing strong member growth. For example, according to the Milwaukee Journal Sentinel, the University of Wisconsin Credit Union has alone gained 50,000 new checking accounts in the past two years.

As member-owned cooperatives, credit unions, with lower-than-average fees and higher-than-average dividend rates, continue to be the local alternative to the increasing concentration in the commercial banking sector. The five largest U.S. banks are JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs. According to a 2012 analysis by Bloomberg Business Week, these five banks had assets equal to 56 percent of the U.S. economy, compared with 43 percent only five years earlier. With the continued national-bank purchases of regional and community banks, this concentration is likely to increase in coming years.

By all accounts, the speculative behavior of large national banks led to the 2008 financial collapse. In response, national regulators such as the FDIC have created extensive new banking regulations that ironically make it very expensive for local community banks to comply, thereby accelerating the concentration process as they are forced to merge into ever-larger banks. Financial experts such as Dallas Federal Reserve Bank President Richard Fisher argue the large national banks need to be “restructured into multiple business entities” rather than becoming even larger and potentially requiring huge taxpayer bailouts should they get into financial trouble once again.

Across the Atlantic, the conservative British government has stated it wants to see a larger amount of the nation’s consumer deposits placed in financial cooperatives rather than in that country’s large national banks because it too is worried about further taxpayer bailout of the large national banks should they once again struggle. To this end, The Co-Operative Group UK, the world’s largest consumer cooperative with over six million members, recently was announced to be the successful bidder for Lloyds’ Bank and it plans to convert Lloyd’s into a member-owned cooperative just as it has been doing with Brittania Bank.

Credit unions appear to not only be good for consumers, but for taxpayers as well.

Feds Look at Campus Bank Cards

The new federal Consumer Financial Services Bureau is investigating financial arrangements between colleges and universities and credit card companies because of reported cases of students being overcharged for debit card services. The agency’s student-loan ombudsman, Rohit Chopra, recently stated, “We’re finding the students may not always be shopping for the best deal and they’re inherently trusting the school-endorsed product. Little is known about arrangements between schools and financial institutions and those marketing agreements.” University of Wisconsin system campuses do not endorse a specific student credit card. However, the University of Minnesota endorses the student “U Card,” which is supported by TCF Financial Corp. For more information on specific campus cards or to complain, visit: http://www.consumerfinance.gov/students/.


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