Geico Insurance is owned by the government

Why aren't US credit unions open to everyone?

Credit unions are mutually owned (that is, owned by customers) financial institutions that provide banking services. They take deposits from their members (customers) and lend them to other members. The members vote in a board of directors that manages the business.

They are considered not for profit but pay interest on deposits. They receive preferential tax treatment and regulation and their deposits are insured by a separate organization if they are federally accredited. State-chartered credit unions do not have to take out any deposit insurance.

Their charters state who can join. They can be regional, employer-based, or some other group with common interests. The regulators restrict them so they don't disturb the banks too much. Otherwise banks would not be competitive due to their preferential tax and regulatory treatment.

Other organizations with similar limits were competitive when the limits were published. For example, there used to be an insurance company only for government employees, the Government Employees Insurance Company. You may know it better than GEICO (yes, the one about the gecko ads). Now they offer life and auto insurance everywhere.

Credit unions want looser restrictions (or no restrictions at all), but not enough to give up their preferential tax treatment. Banks oppose looser restrictions and have as much political influence as credit unions.


Credit unions may want looser restrictions, but their members don't. These restrictions make a credit union a credit union, not a bank. It's about a group of people supporting one another, not bankers maximizing profits.


Just to add that in other countries (e.g. UK and Canada) credit unions or their equivalents are not restricted in membership. They are still different from banks.


"The regulators restrict them so they don't interfere too much with the banks. Otherwise banks would not be competitive due to their preferential tax and regulatory treatment." Banks are buying the government to fund their uncompetitive business model.