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Depositors save with federal credit unions instead of banks largely because federal credit unions are known for their fiscal austerity and risk-averse investment philosophy. It might surprise many federal credit union members, then, that the NCUA already permits credit unions to invest in derivatives, and is now proposing to allow federal credit unions to greatly expand their derivatives exposures. The proposal is a wrong-headed deregulatory move that has gone largely unnoticed in the financial press.

In many respects, federal credit unions are real-life embodiments of the beloved Bailey Savings and Loan from the holiday classic “It’s a Wonderful Life.” As member-owned financial cooperatives, credit unions are community-oriented organizations that put the interests of their members above sheer profit.

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