Credit Unions
A credit union is a financial institution that is owned and controlled by its members. The members of a credit union are those who have accounts with the credit union and use its services. Only a member can deposit or borrow money from a credit union. A credit union is a type of hybrid cooperative where both the workers and customers are members.
Credit union membership in the United States is restricted to groups that share a common bond. A common is typically a place of employment, residence within a city or county, or an association. Credit unions are non-profit entities in the sense that all earnings are paid out to is members in increased interest on deposits or reduced interest rates on loans.
Credit unions often serve low income communities which are largely ignored and poorly served by traditional banks. The most prevalent forms of discrimination by banks include inaccessible credit and charging excessively high interest rates and fees.
The US Treasury certifies Community Development Financial Institutions which are then eligible for certain grants. This worker cooperative credit union would likely qualify as a Community Development Financial Institution. The National Federation of Community Development Credit Unions also provides support for Credit Unions that revitalize low income and minority communities. Additional service and programs are available to credit union that are part of the Federation.
A low income credit union is one where a majority of the members have incomes less than 80% of the national average. This designation allows the credit union to accept non member deposits and secondary capital which helps them maintain the required reserves. It is unlikely that this worker cooperative credit union will qualify as a low income credit union.
