This blog doesnt get any better than when it generates comments containing new and interesting ideas from readers. Such was the case last Thursday (Oct. 16.)
If you missed it, I blogged about banks lowering credit card limits. The reader comments were pointed and worth reading. Go back to last Thursdays Dealer Outlook if you havent read them.
But one of the comments, in particular, is fascinating and worthy of a follow-up blog. It came from firstname.lastname@example.org, a nine-year veteran of the recreational lending business. He suggested its time to form a Marine Industry Credit Union. The traditional banking industry has been making a ton of money (from boats) for decades, wrote yachtmoneyman, and when the economy goes into hard times they pull back so far that even a guy with a great credit profile cant buy his boat
Now Im no expert on credit unions. But where I live, teachers have a credit union, firefighters have one -- in fact, nationally there are more than 9,500 federally insured credit unions reportedly serving 79 million members who deposit $520 billion. Whats more, credit union loans are over $355 billion. So, if credit unions work for teachers and firemen, why not boat industry associations, dealers and boaters?
Credit unions arent new. The first one was formed in Manchester, N.H. in 1909. But in 1934, President Roosevelt signed the Federal Credit Union Act authorizing formation of federally chartered credit unions in all states. The purpose was to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions. Ah, credit and thrift sure sounds good today!
Credit unions differ from banks in that they are organized to serve people in a particular community, group, or members of an organization or association. All the members have accounts and they own the institution. They elect their board of directors in a democratic one person-one vote system regardless of the amount of money invested in the credit union. Interest rates and other matters are set by this volunteer Board. They offer many of the same financial services as banks. Only a member may deposit money with the credit union or borrow from it. In practice, credit unions frequently provide a broader range of loan and savings products at a cheaper cost to their members than do banks.
At the risk of oversimplification, the idea of forming state-chartered, federally insured credit unions in the marine industry may have real merit given the recent abandonment by banks that have just discovered giving a loan to anyone with a pulse isnt a good business plan! Is this the time for our marine trade associations, for example, to examine credit union formations?
The email@example.com indicates he is moving in that direction and has offered to talk to anyone interested. Id take him up on it!