Crunching the credit

One of the key ways that could be used to combat the insiduous effects of credit which the government could use to make life a little easier for people at the sharp end of the current economic crisis is very simple: introduce capped rates.

But as this report shows, the government considered it then quickly discarded it, citing false and unjustified concerns about people being forced to rely on unregulated loansharks. What a joke. What the white shirts in government don't get is that the legal and regulated doorstep and payday lenders are loansharks, some charging interest to the tune of thousands of percent, while proudly waving their consumer credit licenses.

The decision to simply ignore capping, especially without referring to countries where capping has proved to be successful in limiting the excesses of some lenders, is a decision that favours only the scum like the pawn shops and high rate check cashers, the gold scrapers and doorstep voucher men, pond life who profit out those at the bottom end of the income scale.

But capping won't work on it's own. So many people need to be helped out of the clutches of the blood suckers on the fringe finance industry. This is a time when the government needs to show some serious support for finance organisations like credit unions, who in some places are the only experts in finance in disadvantaged communities. Credit unions' provision for lending to small social enterprises and local businesses, a bedrock of the economy, could be expanded to encourage more local entrepreneurs onto a self reliant route to a sustainable economic success.

South Tyneside Credit Union

Blog Action Day 2008: 2

Today I'm joining more than 9,000 bloggers in talking about poverty. I'm saying today, but around the world Blog Action Day 2008 the conversation has started already. You can see some of the posts linked here. But talking about poverty isn't just about heartbreaking stories about starving children in far away lands.

It's local and it's also about solutions. It's the guy outside M&S selling the Big Issue trying to earn a living. It's Citizen's Advice giving that vital help and hope. It's even volunteers helping children learn how to read. It's those and a thousand other stories.


During the recent problems in the banking system one sector of the finance industry has remained unscathed. Credit unions.

Credit unions don't rely on borrowing from banks or money markets. They don't buy up debt or loan books from other financial institutions. Risk is controlled very carefully. Members' interests come before profit and there are no shareholders. Credit unions operate simply, using the savings of their members to make loans to other members.

They are mostly run by volunteer members: for the community, by the community.

All credit unions exist in a limited environment called a Common Bond. It could be anything from a simple staff or union savings scheme, to larger service organisations serving a community like the excellent South Tyneside Credit Union.

Often, credit unions are a way for those who have been abandoned by the big banks to save and borrow sustainably. People have been helped out of the poverty traps of pawn shops, cheque cashing shops and doorstep loan sharks. They've avoided being ripped off by high street high interest electrical goods stores. Some even used credit unions a couple of years back to fill the funding gap after the collapse of hamper firm Farepak.

What's more, savings in credit unions are covered by the Financial Services Compensation Scheme in the same way as deposits held in banks and building societies.

Anyone can have a credit union savings account, and at the minute you'd be daft not to. If you haven't joined one, you can find your local one now. As well as members, credit unions need volunteers, so if you've got some spare time and want to learn some new skills (or teach some of yours) your local credit union would like to hear from you.

South Tyneside Credit Union
Central Office,
119-121 Prince Edward Road,
Harton Nook,
South Shields
Tel (0191) 454 7677