Sir, - As displayed in your leader (March 28th) your knowledge and understanding of the ethos of credit unions is, arguably, as poor as that of Minister Rabbitte; your knowledge of the legislation is, unquestionably, abysmal.
In the first place, there is legislation - the Credit Union Act 1966 - governing credit unions; the current Credit Union Bill, 1996, is the first attempt at free standing legislation.
Secondly, the current limit on the total of a loan to a member is "10 per cent of the total assets of the credit union"; the loan must be repaid within a five year term. The fact that credit unions make very few large loans indicates that credit union boards of directors (and their Credit Committees) impose very strict prudential constraints on themselves.
The £6,000 limit you refer to has nothing to do with loans; it is a limit on the shareholding in a credit union. This limit has its origins in the ethos of the movement and appears, at this remove, to have been designed to prevent any one member (or small clique) from gaining power to financially affect the credit union's "one person, one vote" autonomy; what is needed is a limit that more realistically reflects the current value of money and the overall size of each credit union - hence the movement's strongly-held belief that appropriate monetary and percentage limits be prescribed by the proposed legislation.
You ask the question "are not credit unions, in the main, for holidays, weddings and modest cars? Emphatically, no! True, many of us have had the benefit of a modest car and holidays through thrift and prudent borrowing from the credit union, but we have also borrowed from the credit union for such provident purposes as funding the education of our children and improving our sometimes modest homes. It has been said that "the credit union has built more kitchens in Waterford than McInerneys (the builders)".
The credit union does not pay tax on profits because the credit union does not make profits. The surplus on operation of the credit union is used for the benefit of all its members, through the creation of reserves mandated, ultimately, by second 23 of the 1966 Act, and through distribution of a dividend on shares (savings) held by the member. Income tax may be payable on those dividends - if the member has sufficient liable income. The Revenue Commissioners indeed leave it to the member to declare such income, but are they to be trusted less than, say, farmers, the self employed, small business people, all of whom are represented among the membership of credit unions. It should also be noted that income tax relief is not given on the interest paid by members on the loans which gave rise to the dividend.
The credit union movement has, indeed, prospered through its ethos of democratic, co operative self help and the unstinting efforts of its 13,000 volunteers and more than 1,800 paid staff (many of whom should be termed "paid volunteers") but that ethos is not understood by you or by the Minister. In the words of your competitor, "before you make up your mind, open it". Before giving your generous support to the Minister, please make yourself aware of the facts. - Yours, etc.,
The Grove,
Celbridge,
Co Kildare.