The future of Credit Unions...

AlekSmart

Any views on the current position of the Credit Unions ?

I'm not totally sure I fall in behind Mickey Noonan in his crusade to assist the Irish Credit Union Movement in it's hour of need.

However,I'm also somewhat thankful that Minister N has chosen a Canadian to advise us on what we need to do....he could easily have chosen a Greek I suppose ?

http://www.independent.ie/business/irish/canadian-veteran-put-in-charge-of-merging-our-credit-unions-3223199.html

Icepick

AlekSmart wrote: »

Any views on the current position of the Credit Unions ?

I'm not totally sure I fall in behind Mickey Noonan in his crusade to assist the Irish Credit Union Movement in it's hour of need.

However,I'm also somewhat thankful that Minister N has chosen a Canadian to advise us on what we need to do....he could easily have chosen a Greek I suppose ?

http://www.independent.ie/business/irish/canadian-veteran-put-in-charge-of-merging-our-credit-unions-3223199.html

And their nationality is relevant how?

AlekSmart

Icepick wrote: »

And their nationality is relevant how?

Of absolutely NO relevance whatever in the normal run of things.

oppenheimer1

AlekSmart wrote: »

Any views on the current position of the Credit Unions ?

I'm not totally sure I fall in behind Mickey Noonan in his crusade to assist the Irish Credit Union Movement in it's hour of need.

However,I'm also somewhat thankful that Minister N has chosen a Canadian to advise us on what we need to do....he could easily have chosen a Greek I suppose ?

http://www.independent.ie/business/irish/canadian-veteran-put-in-charge-of-merging-our-credit-unions-3223199.html

The credit unions are important institutions because they allow people who would be unsuitable for bank loans access to credit. Without the unions we would then again see the rise of usurious door-to-door money lenders in poor neighbourhoods.

There would be serious social consequences to the failure of the credit union system.

Anyone

oppenheimer1 wrote: »

The credit unions are important institutions because they allow people who would be unsuitable for bank loans access to credit. Without the unions we would then again see the rise of usurious door-to-door money lenders in poor neighbourhoods.

There would be serious social consequences to the failure of the credit union system.

That's a pretty outdated view of credit unions and its membership and in no way represents their current standings.

The appointment of the chap from Canada was pretty obvious as that's the model the Regulator favours. The 250m set aside, its funny how that amount has dropped....initially it was 1billion, then 500m and now 250m. Wonder where the other 750m is going?

AlekSmart

Anyone wrote: »

That's a pretty outdated view of credit unions and its membership and in no way represents their current standings.

The appointment of the chap from Canada was pretty obvious as that's the model the Regulator favours. The 250m set aside, its funny how that amount has dropped....initially it was 1billion, then 500m and now 250m. Wonder where the other 750m is going?

I'm undecided on this.

For sure during the Time of Plenty,the Irish Credit Union movement came under enormous pressure to get like the banks.

It can be argued that some of those High Profile CU's who did just that are now effectively in the very same position as those very role-model banks themselves.

Oppenheimer1's point regarding usury and it's highly undesirable effects on society does however stand,as the environment has changed so suddenly in Ireland.

One does not have to go into the "poor neighbourhoods" to witness the rise in unlicenced moneylending as it is now one of the fastest growing "Financial Service" areas across the established Social Divides.

We have,sadly,been down this very road before,apparently learning little on the journey.

http://historical-debates.oireachtas.ie/D/0243/D.0243.196912160055.html

RTE's "7 Days" programme on the widespread nature of illegal moneylending remains a cause celebre of Irish Current Affairs broadcasting.

It can be argued that in some regard the Irish Banking System of the 1960's was every bit as customer UNfriendly as that of the 21st Century.

The availability of controlled affordable levels of mid-range credit through locally focused Credit Unions appears to threaten a great many people within the Irish Banking Sector....Why is this ?

Anyone

AlekSmart wrote: »

The availability of controlled affordable levels of mid-range credit through locally focused Credit Unions appears to threaten a great many people within the Irish Banking Sector....Why is this ?

The incoming Personal Insolvency Legislation is going to remove a large amount of that availability. With the proposed ease of going insolvent and walking away from debts, people are going to find it more and more difficult to get credit from credit unions as well as other lenders. Well except Money Lenders who will rise and rise.

Farmer Pudsey

Credit Unions will again have to relise there orgininal reason that they were set up for. During the boom a load of CU became involved in lending large amounts of moneys to inviduals for buisness investments. Most credit unions did not have the skillset to manage this. as well the inviduals who borrowed this kind of money may well have been rejected by the banks.
Another reason CY's took risks was that they had large deposit base and to pay a decent intrest rate they had to lend money. When i first used a credit union I had to have 1/3 of the money saved to access the loan. The CU charged 1%/month on outstanding balances. If you went to the bank it was 16%++ and you could not pay off a bit extra every week if you had it.

During the late 90's and the noughties a lot of credit union members were more intrested in the intrest rate on deposits than the loan rates. Credit union actually became more expensive than banks for car loans etc so often a member may have money on deposit but have a bankloan for the Car/house extension.

I believe it will be a bad move that a lot of small credit unions will be forced to join togeather to form a larger orginisation, I also believe that the forcing of them to take on professional loan managers etc will add to their cost base and restrict there compeditivness in the long run.

I also believe that CU became too worried about having nice offices and long opening hours. The first CU I was a member of opened 3 evening a week and one afternoon and most of the staff were volanteer's. The move into new buildings and fulltime staff made them uncompeditive compared to the banks.

antoobrien

AlekSmart wrote: »

However,I'm also somewhat thankful that Minister N has chosen a Canadian to advise us on what we need to do....he could easily have chosen a Greek I suppose ?

http://www.independent.ie/business/irish/canadian-veteran-put-in-charge-of-merging-our-credit-unions-3223199.html

Icepick wrote: »

And their nationality is relevant how?

I'm thankful that it is a Canadian as they have good a regulation system that is implemented.

Icepick

AlekSmart wrote: »

Of absolutely NO relevance whatever in the normal run of things.

So why did you emphasize them?

AlekSmart

Icepick wrote: »

So why did you emphasize them?

Because the current run of things is not NORMAL.

Whilst Canada would appear to be a stable platform and no doubt full of safe pairs of hands,for which we will doubtless be thankful,Grecian normality on the other hand appears tenuous....

http://www.independent.ie/business/european/debt-crisis-sports-cars-rust-away-in-greece-as-auction-department-disbanded-3226848.html

I remain unconvinced however that Credit Union mergers and requirements to "streamline" the CU movement is much more than some form of subtle(ish) attempt to drive more "Customers" into the clutches of the Mainstream Irish Banking Sector.

So Yep,I have a sense that Nationality is a factor in colouring a persons view of things in many sectors right now....does'nt have to be right n proper,but I feel it can be borne in mind nonetheless.

Anyone

AlekSmart wrote: »

Because the current run of things is not NORMAL.

Whilst Canada would appear to be a stable platform and no doubt full of safe pairs of hands,for which we will doubtless be thankful,Grecian normality on the other hand appears tenuous....

http://www.independent.ie/business/european/debt-crisis-sports-cars-rust-away-in-greece-as-auction-department-disbanded-3226848.html

I remain unconvinced however that Credit Union mergers and requirements to "streamline" the CU movement is much more than some form of subtle(ish) attempt to drive more "Customers" into the clutches of the Mainstream Irish Banking Sector.

So Yep,I have a sense that Nationality is a factor in colouring a persons view of things in many sectors right now....does'nt have to be right n proper,but I feel it can be borne in mind nonetheless.

My own point of view is that ultimatley the Financial Regulator wants Credit Unions to fill the gap in terms of commercial banking that exists in Ireland with the collapse of two banks, and the exiting of many more from Ireland.This is not something they can do in their current form.

The EU have already stated they are unhappy with the merger of AIB and EBS and did a lot to dissuade the proposed merger of BOI and PTSB.

I cant see a situation in any time over the next 20+ years where we will see another bank open in Ireland. So there is little to no competition in the Irish banking market.

Madd Finn

Just watching the News and Prime Time about the new Personal Insolvency program and it seems to say that one of the way people's debt can be restructured is to just wipe out the repayments of any loans they may have with Credit Unions because these are "unsecured" loans, similar to a credit card.

Does this mean that if people simply welsh on their loans to CU's the Union has to just grin and bear it?

How could they survive the accumulated effect of thousands of defaulting loans?

What IS the future for Credit Unions in this scenario?

These are not rhetorical questions? I would love some answers if anybody has any?

lmimmfn

Id prefer the Credit Unions to become stronger, with all of them having bank cards and what not and for everyone to move their cash for f***ing hateful banks, this new legislation is worrying though.

Madd Finn

This is the clip from [URL=http://www.rte.ie/player/ie/show/10197065/#pos=230[/COLOR]] last night's news[/url] which has spooked me. Watch until about 5:15 in.

This example made available by the Insolvency Service of Ireland allows an €18,000 Credit Union loan to be slashed to €500!!!

Does this mean that the CU has to accept that any outstanding loans can be effectively written off like this? Why isn't there an outcry over this? Surely this is gong to have major knock-on effects?

I notice from Wikipedia (I know, I know but it's a good place to start) that several Credit Unions in the UK have already closed down. Are we likely to see a similar scenario here? What will this mean for people who have availed of these credit services?

I note too the controversy over the emergence of so-called "payday loan" services like Wonga and QuickQuid in the UK and the anger with which the sponsorship of a Championship soccer club by such a company was greeted.

I was briefly impressed by the argument that at least these companies provide a legal and more humane credit service to people who would otherwise only have had recourse to loan sharks who like to enforce their repayment schedules with baseball bats and pit bulls and that therefore, although they charged high interest, they were at least preferable to the Nidges and Tony Sopranos of this world.

But if we are going to allow the Credit Union sector to be wiped out to lessen the burden of debt on the banks, surely we are just embarking on a job creation scheme for the most brutal of private financiers: the loan sharks?


Am I being alarmist? I am just a simple lad but that clip on the news last night really spooked me.

Sleepy

A little tbh, a credit union can't be forced to accept a write-down unless they or another creditor bankrupt the debtor. Personal Insolvency practices operate by trying to agree a write-down of debt with the debtors creditors which has them make whatever payments they can afford over a given time frame. If done correctly, it can be cheaper than a full on bankruptcy which can see the creditors getting more of a return on their loans to the debtor than they would otherwise have gotten and can be an easier, less stigmatizing course of settlement for the debtor.

Madd Finn

Sleepy wrote: »

A little tbh, a credit union can't be forced to accept a write-down unless they or another creditor bankrupt the debtor.

But then why, in the example given, was the write down of the CU debt so much larger than that of his other debts? I mean, from €18,000 to €500. That's not so much a write down as a complete write off.

Sleepy wrote: »

Personal Insolvency practices operate by trying to agree a write-down of debt with the debtors creditors which has them make whatever payments they can afford over a given time frame..

Fair enough, but if such were the case I would expect to see a more equitable "burden sharing" of the debtor's loans. In the case portrayed, the Credit Union had to expect an almost complete wiping clean of the slate while the bank still got most of its money back. And this is described by the Insolvency Service as a typical if hypothetical scenario.

Never mind fairness, for the moment. How is this a good idea, and what will be the effects on the Credit Union sector, and by extension, on the sector of the population most likely to avail of credit Union services?

Sleepy

Sorry, your link isn't working but are you trying to equate an unsecured loan from a Credit Union with a Bank's mortgage that is secured upon a property?

There is a fundamental difference between secured and unsecured lending and it's usually reflected in the interest rate of the loan.

Madd Finn

Sleepy wrote: »

Sorry, your link isn't working

It is now. I fixed it. Mind you, it will only stay up for a few days, as it's the RTE Player.

Sleepy wrote: »

but are you trying to equate an unsecured loan from a Credit Union with a Bank's mortgage that is secured upon a property?

There is a fundamental difference between secured and unsecured lending and it's usually reflected in the interest rate of the loan.

This is true and unsecured lending normally carries a higher interest rate, such as the disparity between mortgage rates, say, and credit cards.

I understand however, that Credit Unions try to square the circle by offering lower interest rate loans than banks to less wealthy customers who are trusted by virtue of their being savers with or members of the Union.

Now it seems that carte blanche is being given to debtors to just wipe them out. Who will step into the vacuum? The Wongas and QuickQuids of this world? Or the guys with the knuckle dusters?

As I say: never mind about fairness. This is not bleeding heart why-oh-why liberal hand wringing? This is clinical evaluation of a likely phenomenon. We are spitting on those people who forewent high-risk high-return outlets for their money by putting it into a supposedly sustainable socially beneficial system for providing affordable credit to lower income borrowers with the reward being, supposedly, a beneficial stimulus to local businesses and improved morale and confidence among the less well off that modest borrowings and capital appreciation was possible.

Is this a good idea?

I fail to see how it could be. For everyone except the bust bankers and the dodgy dealers.

Sleepy

Honestly? I think the Credit Unions that get wiped out will be the ones that were mismanaged and have as little sympathy for them as for any other commercial venture that goes under.

What do I think will replace them? Either the Credit Unions that were properly managed expanding into neighbouring communities and/or new Credit Unions being opened by the members of the old ones.

I'd have left all the other banks bar BOI and possibly AIB hit the wall too btw. I never agreed with the bailout but an incompetent government did it and, unfortunately, at this point there are no realistic options for us as a nation to do anything but honour their stupidity.