Credit Unions as a "Good Bank"?

We keep hearing that small business can't get credit from the banks and end up going to the wall. Also, we have no assurance that the banks will lend to small businesses when they're funded by NAMA.

So...Why not pump liquidity into these firms by means of the credit unions, which would then act as a Good Bank? Credit Unions are already set up around the country?

Interesting idea but I don't think a lot of credit unions have the expertise. You are talking about changing the whole risk profile of the credit union movement.

Credit Unions already lend to mainly small, local businesses, putting vans on the road, paying annual insurance and assisting with equipment. Unfortunately, most of them do not currently have the expertise or the systems for business lending. However, the banks seem somewhat lacking in this department also. It is interesting to note, however, that the Credit Unions are doing something about this - I saw in the Sunday papers two weeks ago how the Financial Regulator approved a new course for credit union managers and directors, so this is a step in the right direction.

I think that the credit union model is an interesting one - they source their funds solely and only from their members, so that there is no inter-bank borrowing exposure.

If credit unions were incentivised by the Government to attain higher professional standards, we just might see the emergance of a real alternative to the current banking monopoly. It is a pity that the Registrar of Credit Unions withdrew his Fitness and Probity discussion document earlier in 2009 - perhaps he should now reissue it?

In the meantime, Credit Unions will have to deal with the consequences of spiralling unemployment - unfortunately, the Credit Unions have no NAMA, so that they will have to deal with this on their own.