Bad loans in the meltdown: micro analysis of credit union performance versus banks, an initial investigation

The current economic crisis has had a devastating impact in the credit markets as evidenced by bank failures, large bailouts and foreclosures. Trillions of dollars have been spent to prop up the financial sector in the U.S. alone. Credit unions, commercial banks and thrifts are where Americans go for home loans, but credit unions have a very different track record when it has come to bailouts from the government. Credit unions instead of taking trillions may ultimately not take a dime from the taxpayer. This paper will try to discern this advantage that credit unions have by focusing on the direct impact felt by financial institutions in the United States through net charge-offs from 1994 through 2009 using an exceptional data set that combines information on credit unions and banks in the U.S. from 1994 through 2009.