Ignite Seattle slide decoder: Why $1 = $16
Posted by Jesse Robbins
December 9th, 2006 Other posts by Jesse Robbins
What was Jesse talking about at Ignite Seattle?
Credit Unions have $0.06 backing every $1.00 they loan out… which means they can loan $1,600,000 for every $100,000 deposited by members.
If you loan out $1,600,000 at a 7% APR rate you take in about $112,000 in interest on $100,000 in principal. After deducting operating expenses and paying the members interest on their accounts, credit unions use the remainder to offer better services to their members.
Black Rock Federal will offer the same great services any other Credit Union does, and we will use our resources to change the world.
(edited on 12/11/06)
I was mistaken when I gave this presentation. I said that Credit Unions were able to loan out $16 for every $1 in member deposits, because they have a 6% capitalization requirement. I confused Credit Union capitalization ratios with banking Cash Reserve Ratios, and didn’t find out until I spoke with a gentleman from the NCUA today.
Please see this blog entry for a detailed correction.
Entry Filed under: igniteseattle, presentations, credit union ideas, examples
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