Credit Unions: The Future of the Cooperative Financial Institution

Case Solution

Robert C. Pozen, Grace Hou
Harvard Business School ()

Credit unions are a specialized type of depositary with a non-profit cooperative structure and an exemption from federal taxes. They emerged as small cooperative institutions with a focus on unsecured consumer credit for the working class without banks. Over time, credit unions have grown to a variety of sizes, although a much larger proportion of credit unions remain very small compared to banks. A subset of “non-traditional” credit unions has expanded through a more flexible range of membership requirements and expanded product and service offerings through the use of corporate credit unions and credit service organizations. Cooperatives of saving and credit. In this case, the regulatory proposals on credit unions since the financial crisis are viewed from a policy-making perspective. Credit unions have sought out legislators to broaden the powers that allow them to stimulate the economy and create jobs by serving more customers and lending more. These expanded powers include raising the corporate lending limit and raising secondary capital from non-members. The protagonist is a research analyst who has to weigh the benefits of credit unions against costs, including federal tax breaks. He must also weigh the political goals of credit unions against alternative ways to achieve those goals.

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