An update to my earlier skepticism about the transformative power of moving your money from a bank to a credit union (“Moving money (revisited)”).
The Federal Reserve is out with the flow of funds accounts for the third quarter, its periodic detailed view of the movements of money by instrument and sector. Credit union assets rose 0.9% (not adjusted for inflation) between the second and third quarters. Consumer credit (like credit cards and auto loans) extended to members rose 0.9%, and mortgages by 0.2%. Holdings of federal agency securities, meaning mortgage-backed securities like Ginnie Maes and Freddie Macs, were up almost 2%. Far greater increases were recorded in bank deposits, with checking accounts up by almost 50%, and savings accounts and the like up by almost 5%.
Over the last year, assets are up almost 5%, with mortgages flat and consumer credit down almost 1%. But holdings of Treasury bonds are up 95%, and of mortgage securities, 28%. Checking accounts are up 21%, and savings deposits, 9%.
Since the recession began at the end of 2007, credit union assets are up by 25%. About a quarter of that increase went to home mortgage loans—but over half (55%) went to mortgage-backed securities and 15% to savings deposits elsewhere.
In other words, the credit union is acting as a middle man for unknown banks, and to a lesser extent greasing the conventional mortgage markets. Lending to members is flat to mildly down.
Of course, all this predates the alleged CU boom inspired by Occupy Wall Street. But given their recent behavior, if the hard numbers bear out all the anecdotal supports of billions moved, then the lion’s share of the intake went to Ginnie Mae’s and bank deposits.
You may like the lower fees and more personal service of a credit union, but you’re not really doing anything dramatically political by banking there.