... a risky business?
Would like to strongly emphasize something which most of you have probably skated over too lightly.
For the first 3 or so decades of its existence, SECU was an uninsured investment club limited to North Carolina state and public school employees. The "club" was limited to "investing" only in consumer loans and only to other members - nothing else.
But here's the really important point. For the SECU member "investor", for the member "shareholder", nothing was guaranteed. SECU by statute was operated on a not-for-profit basis; if operations went well the shareholders received a "dividend" on their savings. If things went "badly" shareholders would see their savings balance reduced, creating a loss. During this period - and over its entire history - SECU never had a "bad" year, never operated at a loss. Costs were kept low, members volunteered their time to run the credit union and approve loans. Loan losses were rare.
In the 1930's banks were privately-owned and uninsured. During the Great Depression over 4,000 U.S. banks failed, causing tremendous losses for depositors. As a result, Congress created the Federal Deposit Insurance Corporation (FDIC) to insure depositors up to $2,500 (today it's $250k!) and to restore confidence in the banking system.
Some credit union leaders felt that deposit insurance for credit unions would be beneficial, many leaders did not. They feared federal government intrusion and overreach. In 1970, Congress created the National Credit Union Administration (NCUA) to provide deposit insurance for credit unions equivalent to the FDIC.
SECU did not sign on for NCUA insurance until 1984. As a member with deposit insurance, losing your life savings has been virtually eliminated, but have your "risks" as an SECU member-shareholder decreased?
Did you know that 3 of the largest 50 banks in the U.S. - Silicon Valley Bank, First Republic, Signature - failed in 2023?
Yep, just last year,... weren't you paying attention?
