How the Financial Crisis of 2008 Affected Credit Unions

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Liability insurance for bankers

Individuals, organizations and businesses count on banks and credit unions to securely hold their financial assets. When the financial crisis unfolded, the running conversation among consumers regarded profits made by banks. Credit unions offer a not-for-profit option for members yet still need liability insurance for bankers as they can even be sued much like a traditional bank.

Financial Crisis Impacts

With millions of dollars lost in the financial crisis of 2008, the economy tumbled into the Great Recession following the Dow peak of October 2007. Consumers wanted repercussions and cried out against for-profit banking institutions. The Securities and Exchange Commission implemented several regulations that impacted financial institutions across the board.

Credit Union Growth

The number of credit unions declined from 2003 until 2015. The number of members and assets held within credit unions steadily grew since 2003, but it is not clear whether or not the financial impact reactions had much of an impact on credit union growth. Many credit unions consolidated following 2008, decreasing the number of institutions but maintaining the steady growth. It doesn’t appear that the for-profit and not-for-profit debate has resolved and may continue to be an ongoing issue for many.

Credit unions and other financial institutions benefit from liability insurance for bankers. The policies step in to cover defense costs, awarded damages and protects the institution’s assets. Lawsuits happen and while not always with merit, the financial impacts can still hurt if the institution isn’t protected.

This post was written by , posted on May 29, 2019 Wednesday at 8:44 am