‘Teenage Kicks’ wouldn’t have been recorded without the Credit Union. It’s hard to imagine Derry without the Undertones. Today Derry is a very different place to the Derry of the mid-1970s when the band formed but, for this visitor, Derry and The Undertones still go together. And it wouldn’t have happened without a £400 loan from the very credit union that John Hume set up in 1960 – the first ever in Ireland.
Looking out from the city walls over the Peace Bridge towards the Waterside, the Foyle flat and translucent in the crisp morning sun, the city looks photoshop pretty. This is a 21st Century Facebook Derry, basking in the final moments of the Year of Culture – miles away from the black-and-white, rented television Derry of my childhood.
Back then, Derry was a failed place where unfortunate “keyholders” were advised by UTV newsflashes to return to their premises; but it also had the unambiguous success of a few young lads from the Bogside on ‘Top of the Pops’, singing about teenage promise, some bloke called ‘Jimmy Jimmy’, the excitement of the summer and know-all cousins who “flicked the kick” at Subutteo.
Today the place is rebuilt. The glass and chrome of the property boom and massive investment have replaced the steel bars of the Troubles. Sandinos bar and cafe beside the bus station serves Latin American coffee underneath a large print of Che Guevara, wedged between the clenched fists of the Black Panthers’ flags on either side of printed messages from Nicaragua’s Sandinista movement. Derry is still different – half student revolutionary, half property developer.
But one constant has been the Derry Credit Union, founded by John Hume who saw that the rationing of credit was like the rationing of public housing. Those who owned credit determined who got credit and thus ruled the country. The local bank managers were Protestant, lending to Protestants and excluding the Catholic majority of the city. Hume understood that credit was a civil rights issue and the Derry Credit Union was much more than a proxy bank; it was a fundamental part of the civil rights movement.
In a recent interview in the ‘Derry Journal’, Billy Doherty, the drummer from The Undertones, explained how the Credit Union was instrumental in supporting them.
“With all up-and-coming bands, one of the most challenging things is how they can afford to buy musical equipment. This was certainly the case for The Undertones. We all came from modest backgrounds, with no easy money about to buy band equipment.
“Thankfully, we had arguably one of the best financial institutions on the planet to depend on, and for us that was Derry Credit Union.
“In 1978, Michael Bradley, our bass player, secured a loan from the credit union to buy me my first brand new professional drum kit.
“We got a loan of £400, and with the money that we earned from our weekly shows in the Casbah, a local venue in Derry, we managed to pay back the loan.
“Like thousands of people from the town we had the help of a local, dependable financial co-operative that supported the community and I’m so grateful for the wonderful service that Derry Credit Union provided.”
This is why the crisis in Irish credit unions is so distressing. Credit unions provided money for people who the banks wouldn’t touch. The credit unions provided small loans to small people, not big loans to big borrowers. This is an essential service – half financial, half social.
Credit, in the right amounts and spent on the right stuff, is crucial. For example, if a family has no access to credit they can’t plan for the future. Take a family that wants their children to go to university but can’t afford the immediate outlay.
Traditionally, without a loan to cover essential costs, this family would have to forego college and their kids would have had to go out and get a job. Then came the credit boom and we now know that the credit unions lent out against property and made the same mistakes as many of the banks. Why did the credit unions follow the banks into excessive lending?
Arguably, the banks were driven by the tyranny of that shallow ideology – shareholder value.
They had share prices, which were linked to short-term profits, determined by bank lending much, much more than what it was taking in on deposits. Remember deposits are liabilities to the banks (things they have to pay out on), while loans are assets (things they get paid for). So the logic of high share prices generated an equivalent high risk because the banks confused high prices for low risk when in fact high prices create high risk. But the credit unions – with no share prices to terrorise them – didn’t have to chase the market. Understanding risk is so crucial to operating any financial operation. The thing about risk is that it is almost always a function of price. When prices are high and everyone wants a piece of the action, the prices tend to go up and up. This means they are driven far above fair value by the effervescence of the herd. Each month’s figures evidencing yet more price rises, attract yet more new money. Over time people confuse higher prices for lower risk when in fact the opposite is the case. The credit unions that are now in trouble didn’t appear to have this risk process inbuilt and they simply mimicked the banks.
More egregiously, it can be contended that they had less reason to do so because due to their co-operative and mutual characteristics, they didn’t have shareholders to worry about.
Now the credit unions will have to rebuild themselves. This will probably involve lots of mergers. It would be a disaster if the regular banks made a move on the weakened credit unions.
The leadership of the credit unions must stand up now, explain their loses and promise their members that credit unions will get back to basics.
Lending and credit are the beginning of a process that can unleash creativity as we saw with The Undertones. We can’t afford to lose the essential lubricant that is the credit unions.
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Adam
Credit Denied…….please apply again .
So the Credit Union is responsible for The Undertones, huh? I use to cry when they came on Top of the Pops, they were that bad.
Wonderful writing that brought back memories. I smiled when remembering the black and white rented telly and remember the day we got a rented color set from the same shop. It was life changing and I remember the thrill of running home from school that day in 1972. A mate said to me ‘your colour tele is in the hoose ya lucky b’ and when I got in the old man was sitting in his chair at the window smoking a plain fag and reading a detective novel. The tele didn’t come and we got you a bookcase with a… Read more »
+1 to DMW. Best yet.
NEWS-a quarter of all Credit Unions will likely need to be bailed out.
But what about the children, their piggy-banks, who will guarantee their piggy-banks?! They are simply Too Cute To Fail.
“How A Nanny-State Guarantee Fosters Reckless Abandon- Banks And Credit Unions And Children’s Piggy-Banks – Why Savings Are No Longer A Financial Privilege But A Guaranteed Inalienable Right Without Risk – How Adult Savers Became Mollycoddled Children and How Their Deposit Invigilators Behaved as Children – Remove The Comfort Blanket From The Adult-Children So That They Can Grow Up And Fend For Themselves”
The Max Keiser Report discusses his run-in with Karl Whelan at Kilkenomics.
https://www.youtube.com/watch?v=MNXmL771mBA&list=SPPszygYHA9K2ZtV_1KphSugBB7iZqbFyz&ind
A great article, real skilful clarity in the writing, David. On Sun evening at Langton’s Set Theatre, the final show “Ten More Ideas To Help Ireland Recover and Grow” had an interesting exchange between a fella and the panel about co-operatives and worker owned capitalism on the island of Britain. John Lewis, etc. Like John Lewis worker collectives, worker owned finance through Credit Unions was one of the great cultural and political achievements of the Industrial Revolution. In Britain, that whole heritage of “Building Society” finance was swept away in an orgy of ‘greed is good’ short-termism whereby The Halifax… Read more »
HI A FAMILY MEMBER OF MINE RECENTLY BOUGHT SOME TRANSPORT (VAN) FOR HIMSELF, HE BORROWED 20K FROM HIS CREDIT UNION AT A RATE OF 6.9% APR, HE HAS THE MONEY IN HIS SHARES TO EASILY COVER THE LOAN, WHEN I TRIED TO EXPLAIN TO HIM THAT THE CREDIT UNION WERE LENDING HIM HIS OWN MONEY WITH NO DIVIDEND AND CHARGING HIM FOR IT, HE DID NOT SEEM TO MIND, WHEM I EXPLANIED TO HIM THAT THE INTEREST FOR THE FIRST YEAR ALONE WOULD COVER THREE YEARS OF PROPERTY TAX ON HIS HOME HE SAID HE FELT SICK,HOW MANY PEOPLE DOES… Read more »
The Virginian (James Drury) and Trampus (Doug McClure) were wearing red and blue shirts respectively and there was a vista of summer green trees in the background. The colour was stunning and all the more so because I had never before been to a cinema to see a colour film. It literally took the breath out of me and left me speechless and feeling like the luckiest schooboy in Scotland I used to wonder what they meant when there was ‘no reception’. I thought the picture came through the plug and I had no concept of radio waves until I… Read more »
Effervescence is a part of the human condition. When being professional working at banking it should be an instant dismissal offence. Barmen should not be drinking while they work. Banks should not be assuming value at risk remains static just so they can be effervescent. But if the deal is they get their bonuses no matter what who can blame them.
We need a community based credit scheme…where are those Kilkenny marbles?
Nostalgia – It is difficult to see a future in it but looking back in hindsight its future looking bright. John Bugg defies X-Factor style banking and euphonises old style raw talent over cooperate music /banking But you don’t have leave this blog to see that people invest in money for money sake and not for creativity – raw talent as it once was – the only difference between some on this blog and the wall street set is the size of their wallet i.e. they are just pissed they are not banking X-Factor style -right here on this blog… Read more »
_ -Jake BugG-_+
Nostalgia – It is difficult to see a future in it but looking back in hindsight its future looking bright. Jake Bugg defies X-Factor style banking and euphonises old style raw talent over cooperative music / banking, You do not have leave this blog to see that people invest in money for money sake and not for creativity – raw talent as it once was. – The only difference between some on this blog and the wall street set is the size of their wallets. i.e. they are just pissed they are not banking X-Factor style -right here on this… Read more »
The root cause of the financial downturn as I see it,is demonstrated in the chronological order of the ’98 LTRO blow-out first and then the insane “consolidation” of The Graam Leach Bliley’s Act ’99, which basically detonated the financial floodgates, in an engineered fashion. From whence we were accelerated relentlessly for a decade+. And at warp speed ,the issue of the ponzi scheme of FIAT money (which some here still seem to think was a root cause )played but a secondary or tertiary sub-surface role in the destruction. After these two sequential detonations ,what happened would have played out anyway,… Read more »
The only national bank operating correctly is the post office
http://theeconomiccollapseblog.com/archives/federal-reserve-whistleblower-tells-america-the-real-reason-for-quantitative-easing This is what happens when you have a Ponzi scheme currency. Unlimited printing to monetize debt and buy bonds nobody else will. Insanity and GS does nothing for this. GS is a red herring, a straw man and waste of energy. Then the receiving banks use uncontrolled fractional reserve lending to increase that money 10-100 fold but nobody is borrowing anymore, even at negative interest rates. Welcome to stagflation. Depression in the physical economy and hyperinflation in the monetary economy. I forecast negative interest rates 20 years ago. Even then I could see that government stimulus had no end… Read more »
Try the reality zone. Keep you busy and off the blog for a couple of days.
http://www.realityzone.com/currentperiod.html
Did I just see a duplicate post?
These web platforms and front end frameworks sound great initially but when a site gets well used they can cause problems. Usually user input errors. Trying to keep them under control is often like trying to stop water pouring through a sock
Redefining ‘Wealth’
Monetary Systems vs. Credit Systems
To put the issue of Credit Unions, National Banking in perspective, this short video goes to great lengths for those today who have forgotten what economics is all about.
This video link gives some backround of the status quo back in the
“”Go-Go 90’s” …
Greenspan,Bernake& Larry Summers
versus
Brooksley Born
worth the watch
http://www.pbs.org/wgbh/pages/frontline/warning/view/
Hi all, I’m so glad I made a conscious decision not to get dragged into the same shite the blog is repeatedly descending into which is the GS/sound money dogma. Talk about kicking the shit out of a dead horse over and over and over again. Both points of view are correct. Split banks work better. Sound money works better. Bonbon/whatamess then prove over and over again why GS is unworkable by demonstrating over and over again how the established order ensure GS doesn’t get implemented the latest point here is JP Morgan spent $350m ensuring it doesn’t. Tony you… Read more »
What we need now is a kick the telly revolution
“Elizabeth Warren challenges Obama to break up ‘too-big-to-fail’ Wall St banks
Amid speculation that she might run against Hillary Clinton in 2016, firebrand senator attacks regulators for multiple failings”
This woman is to credit union / GS what Clinton is Wall St what we need now is a kick the telly revolution then Warren may be president of the USA and a form of GS may follow tooth-sweet.
Just in case some Tiger’s think Glass-Steagall is an academic point, remember it was the 1933 basis for the US Recovery and the defeat of international fascism. Wall Street never accepted that nor the London School of Economics. To call the economic savagery of the EU and Obama anything other than fascism is, well, simply Tiger. Putting lipstick on it or putting it to music at a festival is simply Tiger.
IT- Could the US be heading
towards an Elizabethan era?
It is beyond me how the IT mentions Elizabeth Warren and avoids Glass Steagall. It is truly amazing. Maybe it was redacted?
A Tiger Taboo ?
Wow! Is this new or did I miss it first time around? Nice bit of patriotic Sovereignty and fiduciary duty of care there, Regulatory folk.
Is this “pulling it out of our arses” redux? Has someone lit the blue touch paper?
“British government knew before Irish cabinet that bank bailout would take place
Secret communications between regulator and British treasury revealed”
http://www.irishcentral.com/news/British-government-knew-before-Irish-cabinet-that-bank-bailout-would-take-place-232251661.html#ixzz2kugefoqi
Economics for anti-dummies :
Educating A Renaissance… Ireland – An Economic Revival (Based on Marine Transport, Engineering and Scientific Exploration)
No PhD needed. And no apologies to “popular” culture, Tiger “sensitivities”.
Currency wars in full force.
http://campaign.r20.constantcontact.com/render?llr=orkbnrcab&v=001A-vrUR0Y61t8XN6HuJbbVgmz498V94DTvkIb_9_SWP0Gz78P8wDxkUccsC9PQvGiBEZ0Q8wE0G2YxGelXcFoVUtyYgws7NuPihwDXFKKUY4u9sJy1H1Qk2nbvvY0tnUz1qooOLUaUNg%3D