HIGHTSTOWN, N.J. (7/28/08)--Banks' commercials are shifting from products and services' features and conveniences to touting their capital position--a sign of a crisis of confidence in the banking system, according to the New Jersey Credit Union League. League President/CEO Paul Gentile, in his president's message to credit unions in the league's weekly newsletter, noted that capital strength is what banks are promoting in the wake of the failure of IndyMac bank (The Weekly Exchange July 21). In that failure, depositors lost funds beyond the limit of deposits covered by federal insurance. Credit unions throughout the country are reporting that members have inquired about federal deposit insurance, he wrote. "Credit unions of course have a higher capital ratio than banks, just over 11% compared to banks' 10%. Here in New Jersey, credit union capital is near 12%," Gentile said. Although credit unions' insurance has the same protection as that of the Federal Deposit Insurance Corp., the National Credit Union Share Insurance Fund is less recognized among consumers, Gentile noted. The situation serves as a reminder, he said, that consumers' knowledge of credit unions is still much lower than that of banks. He questioned whether credit union leaders themselves could adequately describe the differences and similarities between credit unions and banks. Gentile suggested leaders explaining the differences should emphasize the difference in credit union structure, describe how credit unions exist solely to meet the savings and lending needs of members (as opposed to shareholders demanding high profits), and explain that banks have an edge in raising capital quickly while credit unions can do so only through retained earnings. "The 11% capital level credit unions maintain has been built up over years of prudent management," he said. "Credit unions also have higher capital requirements than banks and do not enjoy a risk-based capital structure like banks. These are all things bankers would not want to deal with." He noted the league will include "How to be a credit union advocate" in its education offerings.