Credit Union Lending Restricted

The Registrar of Credit Unions (the part of the Central Bank that looks after Credit Unions) has imposed harsh new lending restrictions on 7 out of 10 credit unions countrywide.

At a time when credit is not flowing from the banks, the Credit Union network was seen a place where a good savings record meant that one could get a small loan with relative ease and your circumstances would be considered on a personal, local basis, not by a computer in 'Head Office' deciding weather you were a good bet or not. In fact 70,000 new members have joined Credit Unions over the last two years as the public's trust in traditional banks has reached an all time low.

Credit unions have been hit hard over the last few years, they have suffered poor investment returns and a large increase in people falling behind on their loan payments, but ironically enough they are desperate to lend out money at a time when most banks will reject all but the most Gilt Edged application's. Most credit unions have lending of below 50% of the amount that they hold in savings, some banks have lent out 160% of savings. It could be argued that if the banks managed themselves nearly as carefully as most local Credit Unions, we would not find ourselves in the current financial crisis.

They have been restricted in the amount that they can lend in a month, or the amount that can be lent to any individual member. Anecdotally people are unable to go back to College this month as students parents are unable to raise the €2000 registration fee despite impeccable borrowing records.

Unfortunately the only people who are likely to gain out if this are the illegal money lenders with their punitive rates of interest and questionable collection methods.

FS