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Mica explains CU difference on CNBC-TV
WASHINGTON (12/18/08)—Credit Union National Association (CUNA) President/CEO Dan Mica Wednesday took an opportunity on national television to spell out the credit union difference, note how credit unions are still lending to consumers in today's economy, discuss a federal backup plan for corporate credit unions, and explain why credit unions need their own federal regulator. In a comprehensive live interview on CNBC “Squawk on the Streets,” Mica first responded to a question from host Erin Burnett about how credit unions differ from banks. The CUNA leader said, “In clear, quick terms, a credit union is a not-for-profit financial institution. Banks are for-profit. There's the bank, the shareholder and you. They try to make money to get to it the shareholders. The credit unions, there's you and the credit union. Any money left over goes to you.” Mica also noted that credit unions have equal federal insurance through the National Credit Union Share Insurance Fund as banks and thrifts have through the Federal Deposit Insurance Corp. All federally insured accounts currently are covered to $250,000, he said. Mica also spoke about the strength and soundness of credit unions, noting that they "have 11% capital nationwide--the rest of the financial services industry would love to say that." And because of their strong capital position and their avoidance of the problem types of subprime loans that have unsettled the housing and mortgage markets, Mica emphasized, credit unions are still making loans.
Click for member-only video CUNA President/CEO Dan Mica on CNBC Wednesday. Click for member-only video. (Photo provided by CUNA)
"They've made very conservative loans, based on relationships," said the head of CUNA. However, Mica also explained that credit unions are “getting some collateral damage” because everything around credit unions is starting to collapse. For that reason, Mica said, the corporate credit unions that support credit union liquidity need to have the same kind of federal backups available to banks. When asked if a single financial regulator would be a good idea for credit unions, Mica said that the unique nature of credit unions makes such a plan a bad one. He also doubted the success of an idea that would lump credit unions with the same commercial bank leaders who have said they want to put credit unions out of business.
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