In Brief: Japanese Bank Crisis Haunts Trade Group

MADISON, Wis. - Upheaval in the Japanese banking industry has caused headaches for U.S. credit union trade groups.

Two troubled Japanese institutions - Kizu Credit Corp. and Cosmo Credit Corp. - have been called credit unions in the U.S. media.

And industry trade group representatives are worried that consumers here might not recognize the difference.

"In the long term it might have a negative effect," said Jerry Karbon, media relations manager for the Credit Union National Association. "If more of the Japanese financial institutions continue to fail, it's possible people looking at the newspaper here might forget, or not realize, they're talking about" overseas institutions.

A more appropriate name for these institutions - of which there are more than 500 with $400 billion in assets - is "credit society" or "credit cooperative," he said.

Karen Shaw Petrou, president of ISD/Shaw Inc., agreed that the term credit union is a misnomer, when applied to the Japanese institutions.

Although they are mutual in structure, like credit unions, the Japanese institutions are larger and focus on commercial lending, Ms. Petrou said.

"They're much more analogous to a mutual savings institution than a credit union in their charter," Ms. Petrou said.

In response, CUNA has sent information to news organizations about the differences between the two types of institutions, and has sent similar information to its member state credit union leagues.

Similarly, the National Association of Federal Credit Unions has described the differences in its weekly newsletter.

They are also distinct from Japanese credit unions that, like their U.S. counterparts, act as voluntary cooperatives and focus on consumer lending. There are about 65 such institutions with $5 million in assets.

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