Sir - It was sad to see Pat Rabbitte defend on TV his decision to restrict the growth of credit unions. Firstly, in a country with the highest home ownership in Western Europe it is natural that the members of a co operative bank should approach it for a mortgage in their major lifetime investment. Many will transfer their other business to institutions, such as the building societies, which are allowed to offer a complete service.
By what standard does he consider the building societies "mutual"? Originally they may have been. Now the members of large societies have no effective control. They cannot even find out who the other members are. There is no distribution of surplus to depositors or borrowers except on winding up. In spite of fiscal privileges they are just competitive with commercial banks.
Secondly, minimal effort would discover that a central bank for credit unions is necessary both in theory and in practice, where cooperative banks are vital institutions abroad. The need to supervise, spread risk outside the local membership and to manage funds collectively is obvious. It is by this means that the local societies retain their intimate member relations, while gaining the benefits of professional management.
Credit unions are a form of constructive socialism. The need for them is shown by the rapidity of their growth in a few years to a membership approaching half the eligible population (1.8 million). Mr Rabbitte, and the Government should reflect, ascertain the position in Ireland and abroad, and amend the proposed legislation. - Yours, etc.,
The Elms, Stillorgan Road, Dublin 4.