If everyone switches to a credit union.

[RB TexLa]

Won't the credit unions become to big and then have to be occupied?

[valerief]

1. What we need to move are our 401K savings. nt

[A HERETIC I AM]

18. To what? n/t

[valerief]

19. That's the problem. nt

[A HERETIC I AM]

20. Well actually, it's not.

You do have choices, both in the kind of accounts you use in this regard as well as the type of investments you make inside them.

There are certainly problems with the 401(k) programs as they exist, no doubt. A choice of providers instead of the typical single provider offered by most employers would be a start, as well as better education of participants and wider choices on investment options.

The thing is, it does take effort on the average persons part to find out what each investment offered in a given plan is, as well as what it is made up of. Unfortunately for most 401(k) plan participants, and I do mean most, they just simply aren't willing to take the time to do the necessary learning.

Edit: spelling

[valerief]

21. No, the problem is the investment itself. We should have pensions. nt

[A HERETIC I AM]

22. A 401(k) isn't an investment. It's an account. n/t

[valerief]

24. 401Ks are plans that have participant accounts.

Those plans invest in mutual funds. The money in the accounts are invested.

[A HERETIC I AM]

29. Now you are stating it more correctly, but they do NOT have to be invested in Mutual Funds.

It would be a rare bird for a 401(k) plan to not offer some sort of "cash" option.

And FWIW, the participant directs which investments to place his money in. In a Pension fund, no such choice is given.

[valerief]

31. The plan can limit what funds are included in the plan from which the participant can invest.

And that cash option is a Money Market fund.

[A HERETIC I AM]

33. Not necessarily.

I have had 401(k) plans that offered a straight cash account. Basically just a "Bank Deposit" type option.

But I agree with you and I stated in my earlier post;

"There are certainly problems with the 401(k) programs as they exist, no doubt. A choice of providers instead of the typical single provider offered by most employers would be a start, as well as better education of participants and wider choices on investment options."

[valerief]

32. Annuities offer fixed income. nt

[A HERETIC I AM]

35. Yes they do, but what do you think an Annuity is invested in? n/t

[valerief]

37. What does it have to be invested in? Are all invested in traded stocks?

If the 401K instrument could be created in the 70s, couldn't another instrument be created in the teens? One friendly to the 99%? Would it have to be traded in the stock market?

Of course, the value of everything is dependent on the stock market.

I want to bring a chicken to the doctor like that Republican congresswomen told us to do!

[A HERETIC I AM]

39. Annuities invest in a wide array of securities, depending on the choices made....

by the buyer and what is offered by the annuity company. It can range from 100% equities to 100% bonds.

"If the 401K instrument could be created in the 70s, couldn't another instrument be created in the teens? One friendly to the 99%? Would it have to be traded in the stock market?"

Well, I suppose, but the thing is, if the purpose of a pension is to provide an income stream during retirement, and it is desired for that income stream to be somewhat close to the income produced by the work of the employee during his working years, then there has to be a way to make a contribution, be it by the company, the individual or the government, grow sufficiently to provide that income during retirement.

The money - the growth - HAS to come from somewhere. In European and other countries where there are fully funded pensions, the majority of the money (as far as I understand it) comes from tax revenues, but it is STILL invested in some way as to provide growth.

The choices available that can provide for such growth are fairly limited. It's either the stock market which has the potential to do very well, or the bond market which has less chance for dramatic growth but offers more reliability. The problem with both is that the amount of income or growth they can provide fluctuates over time, often dramatically.

You and I aren't too far apart here, I think.

It's unfortunate that in the US, we seem to value 600 ship navies, 1 billion dollar bombers with no mission and all the rest of the crap that our tax dollars are wasted on instead of properly looking after each other.

I heard a great line quite a while back on a panel discussion - it might have been something like "Face The Nation" or something, where they had a female government official from one of the Scandinavian countries. She was discussing this very issue and when asked by the American dumbass moderator "How can your country afford such lavish pensions" She responded with "well, we don't have military personnel stationed all over the world and we don't spend more than half of our tax revenues on a military."

[valerief]

40. Well, we do have a government pension of sorts. We have Social Security.

That could be beefed up to a liveable amount.

As you noted, imagine the money we'd have without investing it in KBR and Halliburton and Blackwater and oil subsidies and all the other death machines.

I don't know why money always has to grow. Can't it just be recycled? Nature recycles.

The world is too big for my little brain, I guess.

[A HERETIC I AM]

43. Well...think of it this way; (edited)

Let say you take a job that pays....and I'll stay reasonable here - $75,000 a year. Would you or I or anyone else be willing to take only half of that and live on it and place the other half in an account invested in something rock solid, and the closest thing we have to that today is US Treasuries, and just let it sit there?

THAT would do the trick. If you could comfortably live on half the stated salary and the other half went toward securing you in your old age, the problem would almost be completely solved.

The difficulty here is getting people to agree to that. Most people, when presented with a raise, no matter how small, tend to spend it and increase their standard of living, instead of stashing it away. I am most certainly guilty of this in spades.

One of the biggest problems with this entire question is that in the old days when pensions were commonplace, most people who worked till they were 65, were dead by the time they were 75. We are living longer and longer life gets REALLY expensive because of the health issues.

Edit: BTW, I agree with you on SS, but as you probably know, Social Security funds are ALSO invested, in US Treasuries. We just don't contribute enough as individuals to make it "beefed up".

The ideology of conservative economics seems hell bent on letting you keep every single penny you make RIGHT NOW instead of being circumspect as a society and putting some away for that rainy day.

[valerief]

44. You mean instead of our federal taxes and SS contribution?

Heck, why not just pay us double what we're "worth" and sock half away? So corporations would make less profit. They'd make 5 billion a quarter instead of 10.

The game is rigged and will always be rigged. It should just be rigged less. Smarter people than me can figure something out for the 99% instead of the .01%.

[A HERETIC I AM]

45. Not to beat this to death.....

but unfortunately, it isn't at all the case that we could be paid "double what we're worth". And unless you work for one of these corporations you have in mind, it is sort of pointless to suggest such a thing.

I'll use myself as an example....

I work for an auto transport company that has a fleet of about 70 trucks. I know what the rates are the company receives for me to pickup and deliver cars. I get about a third of it. The other 2/3s go to pay the salaries of the crew of mechanics in the shop, the office staff which includes the dispatchers, the monthly payments on my truck, etc. etc. etc. Sure, the owner is comfortable. More so than I would ever be, but HE is the one who put up his own money to buy the trucks in the first place. I don't begrudge him the money he makes by owning this company.

Are executive salaries out of whack in this country? Yes, they are.

Is it possible for everyone to be paid twice what they're worth?
No. Not by a long shot.

[Curmudgeoness]

28. The problem is that most people will never be able to keep up with choices.

Most people who are in the business of finance and investments don't understand much. And we are expected to be experts at the jobs we are hired to do, as well as now become experts in how to invest. There are so few people who understand it all, and they have been educated in it and have years of experience. Everyday people don't have a chance.

[Gormy Cuss]

56. +1

[CaliforniaPeggy]

2. I don't think so...

It's not really about size per se. It's more about how they treat their customers.

Besides, most credit unions (I think) have their members on the boards that run them. I know mine does. That really helps keep them in touch with their members.

[Pied Piper]

9. Hi Peggy!

I'm on the board of my credit union, and Peggy is right. We take care of our members, because they are our colleagues and friends!

[CaliforniaPeggy]

15. My dear Pied Piper!

I'm glad to see you!

:hi:

[daleanime]

3. Too many of them....

now if some one started buying them.....:evilgrin:

[ProgressiveProfessor]

5. They are account holder owned...

[RKP5637]

4. Good point! What I see with greed is often the most cash accumulated the more

greed. I think it goes hand and hand. Greed kinda morphs around to where the biggest piles of cash are IMO. If in the credit unions, therein will be the next pile of greed IMO unless highly regulated.

[Uncle Joe]

6. Credit unions are automatically occupied, when you join, you become a member, not a customer.

Thanks for the thread, RB TexLa.

[sam11111]

8. Owned by you, the CU customer. Customers set CU policies, hire the manager,set his wage

CU is a co op.

No rich banker on top donating gobs of cash to GOP candidates.

Manager might be a republican but his reasonable salary prevents him from donating huge sums to the GOP.

customers can also vote for the CU to never send CU jobs to India.....and never to loan money to businesses that mistreat people...be it sweatshops or union-busters or seal-fur stores or whatever....customers set policy.

Try that at your "friendly small community bank who invests in YOUR community". Try telling them what to do.

Couldn't be more different from banks. A whole different animal.

[Uncle Joe]

10. I agree except for the use of the word customer to describe CU members.

A "customer" doesn't have that kind of institutional control, it's membership that grants the power, you describe.

[hfojvt]

11. I agree except the ownership is mostly a charade

I have belonged to two credit unions and in practical terms they were no different from a bank. Only gave slightly better interest rates.

Well, the one I belong to now does keep letting me borrow my own money for 3% interest, but I think banks will do that too.

We have annual meetings where we supposedly vote on the board of directors, but it seems to be incumbents mostly or picked by the management and generally 3 people running for 3 slots.

The CU is SUPPOSED to be non-profit. I took a proposal to the board, to share 50% of profits with members on a per-share basis. Got no support. Meanwhile the credit union makes about $800,000 a year and has $10 million in accumulated profits. My proposal would have netted me another $3,000 or so over the next ten years. Instead of going to the members, that money will continue to pile up in 'reserves'. For what end? It's not gonna benefit any of the members, except in a minor way in that the interest earned from investing the surplus helps to support the interest we earn. For myself though, I would rather have $3,000 than 1% interest on $3,000.

I bet most members feel the same.

[Uncle Joe]

12. Does your credit union put out newsletters with your monthly statement?

If they do perhaps you could at least get them to publish your proposal to the membership, or maybe post it on their website?

If enough members are made aware, and the credit union still doesn't change, and management can't supply a good reason, the dynamic of their free pass choices for the board may not be so automatic.

[Electric Monk]

30. re: 'Reserves', for what end?

http://en.wikipedia.org/wiki/Fractional_reserve_banking

as compared to

http://en.wikipedia.org/wiki/Full_reserve_banking

[hfojvt]

55. that's not the same type of reserve

although the manager tried to tell me it was. These reserves represent the accumulated profits over the years. The other type of reserve says that when I put $100 in the Credit Union, only some fraction of that money is lent out.

It is true that they can use the accumulated profits for that purpose and thus lend out 100% of the deposits, or more, since they can lend out the accumulated profits too, at least some of them, depending on their reserve requirements.

[CreekDog]

36. why don't you charter your own credit union and operate it as you suggested

you're obviously smarter than everyone running your own credit union.

:shrug:

[Xithras]

47. My credit union does exactly that.

They operate as a nonprofit, and any profit generated during the year is distributed back to the members as an annual dividend. It doesn't happen all that often because they can usually find ways to spend any excess cash flow and prevent it from becoming "profit", but even that spending typically benefits members. They spend it on things like technology upgrades, new ATM machines, a recently upgraded electronic billpay system, etc.

If they were a bank, those funds would have simply gone out as bankster bonuses. With a CU, everything benefits the member one way or another.

[U4ikLefty]

49. Anecdotal evidence without supporting documentation? You convinced me.

:sarcasm:

[Blue_In_AK]

25. Even my daughter who works in special credits at our credit union

calls the delinquent payers that she has to contact "members." It's the cardinal rule -- NOT customers, MEMBERS.

[Jnana]

7. No.

[Shagbark Hickory]

13. Just because something is a non profit or a co-op doesn't mean it will be well run or have good serv

-ice.
People need to use due diligence when finding a new bank or credit union.

So the answer is yes, they can get too big and start sucking or they can be too big from the get go.

[provis99]

16. link?

[Shagbark Hickory]

17. link to what?

If you want to check out a financial institution you can do so at
http://www.bankrate.com/rates/safe-sound/bank-ratings-search.aspx

If you want to find out if their service is any good, try yelp.com , kudzu.com or similar reviews site.
Or try doing a search for (credit union name) + sucks

[provis99]

48. you did not provide a link proving credit unions suck.

therefore, I assume you are just talking out your ass.

[Shagbark Hickory]

50. You're joking I presume.

It's a serious subject though.
People are signing on with credit unions AND community banks willy nilly with the assumption they are better. While anything may seem better than a mega bank, and most probably is, there are plenty of credit unions and community banks that don't very good financial strength, may be sitting on a mountain of bad loans and may not be around for much longer.

And ask anyone that works at a bank and they'll tell you that mistakes happen ALL THE TIME.
How mistakes are dealt with and corrected when the customer reports them are of utmost importance.
After all, this is only every last penny to your name we're talking about here.

If your goal is just to leave a megabank, well you can do that very easily. But if you actually want to find a decent financial institution that will be around for a while and and trains their staff to be very friendly, caring and competent, you need to do a little homework first. Not a lot. Just a little.

[ThomWV]

14. CUs operate the way you were told banks were supposed to, not the way they do

You know the quaint old notion that banks take in deposits on which they pay interest and then lend that money out at a higher rate, using the difference to cover their costs plus profits? Well, it was a fairy tale about the banks, but its how Credit Unions operate. With the Credit unions what would have been profits in the imaginary banking system become capital growth or lead to lower rates at which they lend to members. Its like people working toward everyone's benefit without gouging anyone - what a quaint idea.

[alfredo]

23. Credit Unions are member owned, and in the case of mine,

its members/owners are Postal employees.

[pipi_k]

26. Probably not...

I'm thinking that if the 99% move their money to a credit union, it still won't equal what the 1% have in the big banks.

Especially if there are hundreds of credit unions as opposed to just a few major banks.

I can't see one or two, or even a hundred, credit unions getting too big...

JMO

[Curmudgeoness]

27. Let's not get ahead of ourselves. Just join a credit union.

If, at some time in the future, they start to screw us, we can get rid of them too.

[CreekDog]

34. OP says credit unions will become "to" big

as reliable as it sounds and as reliable a post as the OP usually offers.

[cyglet]

38. Might be flamebait...but...

No. There are large national credit unions (PenFed, etc.) and they're still great.

Amazing what can happen when you're not beholden to shareholders who wouldn't have the account holders' best interests at heart...and that's the crux of it. Not size.

[pipi_k]

42. Not from me, anyway...

I belong to a small local CU, and I also belong to Pen Fed...shares account and credit card.

I love Pen Fed.

No fees. No silliness.

Anytime I've had to call them, they are extra pleasant.

Only one time they made a mistake and they fixed it immediately with no problem.

I can't say enough good things about Pen Fed.

[woo me with science]

51. PenFed does not have free checking for balances under $500.

They charge a monthly $10 fee.

I was surprised to learn this.

[WCGreen]

41. We had a loan and they refused to discharge our debt when we went

through bankruptcy ten years back.

They played around and around and we had to negotiate a settlement back three years ago before we could refinance our home.

I wouldn't have been so upset with this particular credit union if the reason we went bankrupt was all our fault. But because of my debilitating medical condition, our income dropped by almost 40% while our bills all stayed the same plus the medical costs.

I'm just pointing out that Credit Unions are in it for profit just like any bank and that they aren't above acting just like any other bank. In fact the banks were willing to write off some of our debt and settled.

The credit union insisted on getting the whole amount.

[JoePhilly]

46. LOVE my credit union!!!

[Fool Count]

52. No they won't, because there are hundreds if not thousands of them

as opposed to a handful of big banks.

[LanternWaste]

53. B does not necessarily follow -A

B does not necessarily follow -A.

[Zorra]

54. Socialist Banking? Aren't credit unions member owned?

A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members.<1><2><3> Many credit unions exist to further community development<4> or sustainable international development on a local level.<5>

http://en.wikipedia.org/wiki/Credit_union

Sounds workable to me.

[Harmony Blue]

57. You are a member not a customer

big difference.