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Washington CUs gaining on banks--ISeattle TimesI
SEATTLE (3/10/09)--A positive article in Sunday's The Seattle Times cites Credit Union National Association statistics in reiterating what credit unions have been pointing out the past several months: credit unions are a safe alternative to banks. In Washington state, credit unions added about 140,000 members in 2008, while their deposits grew 8.8% to more than $27 billion. CUNA statistics show they loaned 9.6% more money last year than in 2007. Lending at Washington's banks and thrifts grew about 5.8%, said the Times, pointing out that credit unions have required no federal takeovers. "I feel a little bit bad about crowing about having a good year," John Annaloro, CEO of the Washington Credit Union League, told the newspaper. He noted many consumers are rethinking their banking relationships, especially in the aftermath of the Washington Mutual (WaMu) failure. Credit unions were built during the worst of economic times and that may be why they whether economic storms so well, Annaloro added. Still, the article points out the economic fallout has drifted toward credit unions, which have seen increases in loan losses. Gary Oakland of Boeing Employees CU (BECU), based in Tukwila, told the Times its charge-offs on bad loans nearly tripled to $79 million, even though that was just 1.1% of its total lending. The charge-offs are from members holding adjustable rate bank mortgages with payments that ballooned so much they couldn't pay their other loans--car loans, credit cards, and home equity loans. The credit union increased 11% in depositors throughout the year, with an intense two week activity in September as consumers fled WaMu for saver havens. In December, new-mortgage applications at BECU totaled more than $900 million, and the credit union can fund all of them. "Credit unions have kept to the straight and narrow since the movement gained federal approval in the midst of the Great Depression," said the Times. "Savings and loans also were depositor-owned institutions originally, but those largely morphed into investor-owned money machines prone to overheating and flaming out (see WaMu)," the newspaper said. In the article Lewis Mandell, visiting professor at the University of Washington's Foster School of Business and whose research focuses on financial literacy and consumer behavior, pointed out that very few credit unions were caught up in the subprime mortgages. "They are old-fashioned entities. They really don't aspire to be more than the are," he said. He also pointed out they pay "significantly higher" interest rates on deposits and offer better rates on loans. For the entire article, use the link.
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