I’ve already posted other thoughts from reading Secrets of the Temple, a decidedly left-leaning book.

One last note.

A notion referred to several times in the book is that banking, generally, distributes wealth up the economic ladder—a point that’s difficult to disagree with. It goes like this:

• The wealthy deposit their excess funds into a financial institution or purchase shares of stock of a financial institution.
• Those funds are lent out to the less-well-off people.
• The less-well-off people pay the loans back, with interest.
• The wealthy people earn a return on their deposits or stocks.
• Wealth has been distributed up the economic ladder.

It is certainly true that savers earn money off of borrowers.

How does this matter to credit unions or policy makers?

It’s true that the process of taking deposits and making loans is basically the same for banks and credit unions. But the other half of that investment scenario is different: credit unions distribute less wealth up the economic chain because they don’t have stockholders.

It’s true that in credit unions wealth is moved from borrowers to savers, but because there are no stockholders to give a return to, no wealth is transferred from borrowers to investors. The borrowers keep a little more of their funds. Studies comparing credit union pricing to bank pricing bear this out.

Anyone interested in helping lower-income consumers should be keenly interested in lower-cost lending—which credit unions provide—because less wealth is distributed from borrowers to savers.