😎 [Comments are active!]
In 1915, North Carolina adopted one of the very first state statutes governing the formation and operation of credit unions. Why was North Carolina one of the first states to see the need for credit unions? What was the problem?
The principal problem was that working men and women in North Carolina lacked access to a source of credit at fair and reasonable rates. In that era, commercial banks did not lend to most consumers... just something that was not done at the time.
Everybody needs to borrow from time to time for important purposes. What would you do if you did not have access to credit?
The
1915 credit union statute was authored and shepherded through the North
Carolina Legislature by John Sprunt Hill, the patriarch of one of the
wealthiest and most prominent banking families in North Carolina. Not
exactly your barefoot-in-overalls type of guy to be sure! In fact, the
credit union law was the direct result of Mr. Hill's then recent travels
in Europe studying credit unions and other forms of cooperatives. Mr.
Hill happened to be in Europe leading a United States delegation of
national financial leaders appointed by President Woodrow Wilson. They
learned well; they liked what they saw!
❖ "Credit Unions are not banks. Banks are aggregations of money; credit unions are aggregations of men [and women]."
SECU members do not understand that SECU is not a bank. Does that matter any longer?
Do credit unions pay the same taxes as banks? If not, is that why historically - credit union have had better rates for it's customers (members)?
ReplyDeleteThe taxes that banks and credit unions pay are similar with one exception which is the net income tax. After a bank pays all its operating expenses and interest to depositors, any remaining profits ("net income") are subject to tax - the income/profits tax - by the state and federal government.
ReplyDeleteSince credit unions are not-for-profit, cooperatives, they are not subject to the income/profits tax at the state or federal level. No business of any type - including a bank - which fails to make a profit pays an income/profit tax.
So, the income tax exemption should not affect the ability of a credit union to pay competitive rates one way or the other.
Then how the h*** was Brady talking about the most profitable year ever in 2023? That doesn't make sense.
DeleteNot for profit, but not non profit. They can make income
DeleteThe 9:52 pm comment is a good example of our dilemma in looking more closely at what credit unions are and trying to better inform SECU members.
DeleteIf you re-read the statement, at heart it simply doesn't make much sense: "Not for profit, but not non profit". What does that mean? And then the word "income' is introduced as some sort of equivalent of "profit" - which it isn't.
This sort of misunderstanding of "CU Basics101" is the sort of "mixed messaging" which lead to the off-key, Board annual meeting report that SECU had had the "most profitable year ever" (mentioned in the 4:13 pm comment).
The "basics" are not a matter of opinion, or "new/new vs. old/old"; the "basics" are defined in state statute, federal regulation, tax law, accounting rules, and many other places.
As an SECU member, not understanding "the rules of the game" is a risky approach to your financial health.You wouldn't think of driving on the wrong side of the road, you wouldn't try to dribble a football. And, ignorance is neither excuse nor defense, as we've all always been told.
Any questions from the post that the original NC law defined a credit union as a new type of financial institution, entirely different and distinct from a commercial bank?
How do you know? Because a whole new set of state statutes was needed to define the structure, purpose, and limitations of this new credit union idea - it was not simply an "add-on" to the existing state banking statutes.
Credit unions were new, unique, different from a bank.
Trying to go slow on this "Fresh Start". Know much of this is "old news" for many readers, hope you will be patient.
We need to start with "the basics" if we're going to be able to take a well-informed look to the potential "what if's" in the future for SECU and its member-owners.
This is great information. Everyone would benefit from a fundamental knowledge of credit unions.
ReplyDeleteEducation is the key to freedom ...
ReplyDelete(I'll leave it at that)
Difference between profit and income?
ReplyDeleteMost SECU members are employees of large/small businesses, are employed by our county in the local school system, or work for state/federal/local governments. We think of our work in terms of doing a good job and in return receiving a paycheck. We don't have to worry about whether or not we'll get paid at the end of the week, end of the month.. We don't think in terms of income, expense and "profit"... that's somebody else's worry/job/responsibility.
DeleteBut if you were a business owner, you would think in different terms. You offer a product or service to the public. Whatever you "sell" during the month is your income for the month, from which you deduct your operating expenses (utilities, phone, rent, insurance, equipment costs,taxes, etc). Whatever is left over after expenses is your "profit".
Having "income" doesn't mean you'll have a "profit"; businesses fail every day.
Almost every business you can think of is being operated to make a profit... and to try and grow bigger and make a larger profit - that's what business is all about, isn't it?
Why would anyone waste time running a business
on a non-profit/ not for profit basis? That sounds idiotic!
Yet that's why credit unions were created... what up with that?
And, if you're not in business to make a profit, why are you in business?
ReplyDeleteThis is a wonderful question. Hope you will not pass over it lightly and truly give it some serious thought.
DeleteIf we can agree that credit unions are different from banks in terms of structure and statute; and were created to operate on a non-profit/not-for-profit basis... what is the purpose of SECU and other credit unions?
How do you answer that?
People getting funding together to better the lives of all members. One member should not have an advantage over another, equality. Just my thoughts. These are the reasons i still work at SECU!
Delete