As a long-time credit union member, I'd say "no" to the "irrational" part, at least.
I'm really, really glad my own money is in a credit union right now instead of a bank. It may not be bullet-proof, it's locally controlled, owned by its depositors and federally insured.
Credit unions are stable and reputable institutions, and it's a perfectly sane thing to do. You'll also get a better night's sleep if your mattress isn't all lumpy and stuffed with bills. However, your money is insured up to $100,000 per bank per person, excluding joint accounts. This is to say that you and Cattitude could each have $100,000 in savings, for instance, and you can still have a joint checking account at the same bank. You can also each have $250,000 in retirement accounts at the same bank, and you're good. Of course, if you have that much money, there might be better things to do with it that are still relatively safe.
An institution beholden to its member-customers, instead of random stockholders? I'd say it's not only not irrational, it's well in the direction of rational.
Our accounts are split between a (local) credit union and a (non-local) bank owned by an inter-insurance exchange (similar to a mutual, but I suspect harder if not impossible to turn into a corporation).
It is irrational to bank with a for-profit bank instead of with a credit union in the first place, if you have a choice.
I can't imagine a rational reason to choose a for-profit bank over a credit union.
So, no, it's not irrational to switch to a credit union. It's irrational NOT to switch to a credit union, regardless of the health of the financial markets.
As I don't know where you bank, I don't know how (un)exposed your bank is.
AFAIK, my bank (Commerce) is probably OK. It's not one or part of one of the new Big 3 (BofA, Citi, JPMorganChase) who I understand now have 30% of all depositors in the country between them. Before it's current merger, it didn't do a lot of mortgages that I know of, and it's credit card business seemed limited to already existing customers. And the bank it's merged into is a Canadian "Big 5" bank (TD) that didn't fool with that subprime garbage at all, at all, at all.
I'd say not at all. Or if not a credit union, a small local bank. The sort of bank too small to have been playing in the mortgage funds market. My bank has two branches and is doing just fine.
I echo the rest of the satisfied credit union members here, and also note that credit unions are insured by a different agency, the NCUA (http://www.ncua.gov/).
Credit unions are good things, not irrational at all.
I have a savings account, my Christmas Club account, and my car loan at the credit union. The money is taken directly out of my paycheck (and the car payment made automatically!), so I think about it less. And it has a larger rate of interest on the savings and a smaller rate on the loan than I could get at commercial banks.
I do have my checking account and another, smaller savings account at the commercial bank nearest where I work (and a couple of Certificates of Deposit at yet another bank where I used to have my checking; I've just never bothered to move the CDs). This sounds less convenient -- it probably is -- and maybe irrational, but I'm less tempted to take money out of the CU, while it's available when I do need it.
Given the overall state of lax regulation in banking, I'm less confident in Credit Unions than I used to be. Some of the recent randomly-named credit unions that seem to have sprung up in the last seven years or so make me nervous. And some of the established credit unions might have been devoured from the inside by financial vermin and not noticed.
However, assuming that your credit union is doing what it's really made for and holding deposits from some members and making loans with that money to other members, you're safe except for a direct bank run.
In spite of the fact that I mostly hate "It's a Wonderful Life" these days, the scenes of the near loss and rescue of the Bailey Savings and Loan are a good cartoon of banking en large. Frank Capra made a more realistic *ahem* picture earlier in his career, which starred Walter Huston with a similar run-on-a-bank situation. In the earlier picture, "An American Madness," (I think) Huston saves the bank in the few hours available to him when the doors can be closed and withdrawals prevented.
Anyway, if the bank's monetary base is mostly you and your fellow members AND you think that they have enough fellow-feeling to avoid the run on the credit union, you're good. If you think that they might take a "Devil take the hindmost" attitude, stashing some money in a mattress would be slightly better than leaving it where it is at some point.
With respect to Jo, the FDIC deal seems like a lead-pipe cinch: the people responsible for insuring deposits are the one who own the printing presses in the Mint. Keeping money in a mattress is only likely to help until pre-Crash currency is outlawed, but I suppose that having a stash of it might let you buy a little more stuff on the eBlackMarket.
Credit unions are about taking the "will cooperate" in the Prisoner's Dilemna. There's power in a union, but power to harm. (Which is also a lyric from the forthcoming Billy Bragg/Kate Bush duet album.)
Elric and I have had our joint account in a French-Canadian credit union up here in NH since we moved here (La Casse Saint-Marie -- St. Mary's), though it is its American cousin branch. We've been very happy with them -- we get better, and more personal, service than from the larger banks.
I have my business account and personal account with a bank, though -- and I'm thinking hard about moving them. Though, my bank is rooted in Canada (TD Bank -- Toronto Dominion). How that may be of help in this crisis since it's an American manifestation of a Canadian banking entity, I don't know. It may not mean anything at all, which may mean I'll move everything to St. Mary's. I need to do some more research.
All in all, I'd say credit unions are very helpful. However, be aware that the FDIC has been in trouble for decades -- this isn't really anything new. If the FDIC fails, we're all in deep shit.
credit unions are by and large a good thing; i've always had money in a local CU; i like the more personal service, and the principle of the thing as opposed to a commercial bank.
but as others said, your savings in your bank are FDIC insured, and if the FDIC fails we're probably all up shit creek without a paddle.
my irrational thoughts don't go to hiding my money under a blanket, but to buying gold.
Credit Unions are partly run under Federal Regulations (which have been gradually, but probably not excessively, relaxed over the past decade or so) and partly under policies established by their Board of Directors (or whatever), so there's some possibility of unsound practices.
My CU used to be limited to Los Angeles County Employees (active & retired), but there seems to have been a merger & expansion so it now admits any "Government employees". I keep about half my money there, and feel ... reasonably comfortable about it, even though the Federal Insurance wouldn't quite cover the total. The other half is in (*sigh*) WaMu -- about which I'm less comfortable, but not worrying since I decided (years ago) that Worry is a waste of time & energy. Pushing 80, I figure that if there is a Big Economic Collapse, the only thing for me to do is to try to cope & survive for a while. A younger person's mileage would, probably, be different.
I do note that the interest I'm getting from CDs at both places is slightly less than the published Inflation Rate, so I'm actually becoming a bit poorer day-by-day, despite being better-off than perhaps half of the American populace.
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I'm really, really glad my own money is in a credit union right now instead of a bank. It may not be bullet-proof, it's locally controlled, owned by its depositors and federally insured.
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Our accounts are split between a (local) credit union and a (non-local) bank owned by an inter-insurance exchange (similar to a mutual, but I suspect harder if not impossible to turn into a corporation).
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It seems worth noting that your bank is least likely of all US banks to fail, because it isn't centred in the US.
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I can't imagine a rational reason to choose a for-profit bank over a credit union.
So, no, it's not irrational to switch to a credit union. It's irrational NOT to switch to a credit union, regardless of the health of the financial markets.
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As I don't know where you bank, I don't know how (un)exposed your bank is.
AFAIK, my bank (Commerce) is probably OK. It's not one or part of one of the new Big 3 (BofA, Citi, JPMorganChase) who I understand now have 30% of all depositors in the country between them. Before it's current merger, it didn't do a lot of mortgages that I know of, and it's credit card business seemed limited to already existing customers. And the bank it's merged into is a Canadian "Big 5" bank (TD) that didn't fool with that subprime garbage at all, at all, at all.
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Or if not a credit union, a small local bank. The sort of bank too small to have been playing in the mortgage funds market. My bank has two branches and is doing just fine.
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I have a savings account, my Christmas Club account, and my car loan at the credit union. The money is taken directly out of my paycheck (and the car payment made automatically!), so I think about it less. And it has a larger rate of interest on the savings and a smaller rate on the loan than I could get at commercial banks.
I do have my checking account and another, smaller savings account at the commercial bank nearest where I work (and a couple of Certificates of Deposit at yet another bank where I used to have my checking; I've just never bothered to move the CDs). This sounds less convenient -- it probably is -- and maybe irrational, but I'm less tempted to take money out of the CU, while it's available when I do need it.
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not as confident as I used to be
However, assuming that your credit union is doing what it's really made for and holding deposits from some members and making loans with that money to other members, you're safe except for a direct bank run.
In spite of the fact that I mostly hate "It's a Wonderful Life" these days, the scenes of the near loss and rescue of the Bailey Savings and Loan are a good cartoon of banking en large. Frank Capra made a more realistic *ahem* picture earlier in his career, which starred Walter Huston with a similar run-on-a-bank situation. In the earlier picture, "An American Madness," (I think) Huston saves the bank in the few hours available to him when the doors can be closed and withdrawals prevented.
Anyway, if the bank's monetary base is mostly you and your fellow members AND you think that they have enough fellow-feeling to avoid the run on the credit union, you're good. If you think that they might take a "Devil take the hindmost" attitude, stashing some money in a mattress would be slightly better than leaving it where it is at some point.
With respect to Jo, the FDIC deal seems like a lead-pipe cinch: the people responsible for insuring deposits are the one who own the printing presses in the Mint. Keeping money in a mattress is only likely to help until pre-Crash currency is outlawed, but I suppose that having a stash of it might let you buy a little more stuff on the eBlackMarket.
Credit unions are about taking the "will cooperate" in the Prisoner's Dilemna. There's power in a union, but power to harm. (Which is also a lyric from the forthcoming Billy Bragg/Kate Bush duet album.)
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I have my business account and personal account with a bank, though -- and I'm thinking hard about moving them. Though, my bank is rooted in Canada (TD Bank -- Toronto Dominion). How that may be of help in this crisis since it's an American manifestation of a Canadian banking entity, I don't know. It may not mean anything at all, which may mean I'll move everything to St. Mary's. I need to do some more research.
All in all, I'd say credit unions are very helpful. However, be aware that the FDIC has been in trouble for decades -- this isn't really anything new. If the FDIC fails, we're all in deep shit.
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but as others said, your savings in your bank are FDIC insured, and if the FDIC fails we're probably all up shit creek without a paddle.
my irrational thoughts don't go to hiding my money under a blanket, but to buying gold.
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Credit Unions are partly run under Federal Regulations (which have been gradually, but probably not excessively, relaxed over the past decade or so) and partly under policies established by their Board of Directors (or whatever), so there's some possibility of unsound practices.
My CU used to be limited to Los Angeles County Employees (active & retired), but there seems to have been a merger & expansion so it now admits any "Government employees". I keep about half my money there, and feel ... reasonably comfortable about it, even though the Federal Insurance wouldn't quite cover the total. The other half is in (*sigh*) WaMu -- about which I'm less comfortable, but not worrying since I decided (years ago) that Worry is a waste of time & energy. Pushing 80, I figure that if there is a Big Economic Collapse, the only thing for me to do is to try to cope & survive for a while. A younger person's mileage would, probably, be different.
I do note that the interest I'm getting from CDs at both places is slightly less than the published Inflation Rate, so I'm actually becoming a bit poorer day-by-day, despite being better-off than perhaps half of the American populace.
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