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As you may have seen in recent news, Silicon Valley Bank (SVB) and Signature Bank are receiving a lot of press, and rightfully so. These second and third-largest bank failures in our nation’s history are causing consumers to question the soundness of their financial institutions.  Now more than ever, people are looking for reassurance that their hard-earned dollars are safe. To those who bank with a credit union: your money is safe…and insured.

 

First and foremost, recent events were a bank failure and NOT a system failure. SVB was heavily concentrated in tech startup companies and venture capital firms, while Signature Bank was heavily focused on banking crypto companies. These unique business models are not representative of most banks and credit unions in the U.S. financial ecosystem. Both of these banks had a specific, limited customer base, which significantly increased its risk profile.  Today’s credit unions have a wide membership base, which strengthens our overall financial position.

 

The collapse of SVB and Signature Bank were mainly due to uninsured deposits and mismatched investments. Consumers should know that all credit union deposits up to $250,000 are protected and insured by the National Credit Union Administration (NCUA)– the same as any other federally insured financial institution (e.g. FDIC).  A constant safeguard through eight different recessions since 1970, the NCUA is backed by the full faith and credit of the United States. Credit union members have never lost a penny of insured savings at a credit union, not even in the 2008. In addition to being insured, Louisiana credit unions are regularly examined by financial regulators to ensure proper management of your money within the institution.

 

Many consumers still struggle with differentiating a credit union from other financial institutions. So, what’s the difference? If you have an account at a credit union, you’re an owner. It’s simple. Credit unions are governed by a volunteer board of directors, elected by and from the credit union’s membership. Credit union earnings are passed on to members, not outside investors, in the form of higher interest rates on deposits, lower loan rates and fewer fees. The Credit Union National Association (CUNA) reported that more than $16 BILLION in benefits were passed along to credit union members in 2022 alone.

 

For those concerned that they will be limiting the products and services they have access to if they leave their current financial institution, think again. Credit unions have a strong digital footprint and enhanced services that attract both younger and older generations. On top of that, they also offer free financial education and counseling for every stage in your life.

 

Technological, societal and environmental shifts are inevitable. As we continue to face times of constant disruption, there are some things that remain the same, like the credit union difference. Still not sure what that difference is? Visit your local credit union and experience it for yourself. You have nothing to lose and everything to gain.

 

 

Steve Liberto is the interim president and CEO of the Louisiana Credit Union League.