Page 11 - Michigan Credit Union League: 2018 Contact Q1
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RISING FROM RECESSION:
A DECADE LATER
By Shawn Glinis
In the first quarter of 2002, the cover story for Contact recession was particularly jarring to a large number of
magazine was titled “Unchartered Waters: Navigating a credit union members and communities.
Credit Union in Uncertain Times.” The article, illustrated
with iconography that recalled the high seas sailors Credit unions made it through that economic decline by
of the 1800s, faced the ugly “R” word: recession. In not panicking. Led by knowledgeable boards of directors
the third quarter of 2001, economists announced the and management, credit unions made smart lending
beginning of a recession, which prompted a question: choices based on empirical evidence. In 2002, the
What can credit unions do to successfully navigate this League said that, given the credit union movement’s
new economic reality? history of stability and strength, and the skill of the
industry’s professionals and volunteers, there was every
The recession of the early 2000’s wasn’t necessarily reason to believe credit unions could weather any storm
a threat to credit unions. After all, our industry has a that might be looming on the horizon. That’s exactly
long history of persevering through economic turmoil, what happened.
coming out stronger on the other end. For instance, it
was the Great Depression that prompted the passage The Housing Crisis of 2008
of the Federal Credit Union Act in 1934, providing a
federal framework for credit union creation and Fast forward to the second quarter of 2008. In the midst
regulation. Since then, credit unions have successfully of the recession that followed the infamous housing
managed tumultuous financial eras during the 1950s, crisis, Contact’s cover story for this issue shared sta-
1970s, 1980s and early 1990s. tistics that positioned credit unions as “A Rock in the
Storm.” Michigan credit unions finished 2007 with a net
But that recession was still unique. According to the worth of 12.6 percent, outpacing the national average
National Bureau of Economic Research (NBER), it came (11.44), a 0.88 percent delinquency rate, a 0.55 percent
after a decade-long expansion of economic growth return on assets and “a very respectable” 77.75 percent
— the longest in the existence of the NBER. The unin- loan-to-share ratio. “These numbers are a testimonial
terrupted economic expansion of the prior 10 years to the skill, foresight and prudence of Michigan credit
— rising stock prices, full employment and climbing union professionals and volunteers — and the timeless
401(k) rates — had become a normal economic climate value of the credit union philosophy and principles,”
to many young professionals. So, the resurgence of a the article stated.
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