25. Savings and loan associations

A savings and loan association (or S&L) is a financial institution that specializes in accepting savings deposits and making mortgage and other loans.

They are often mutually held (often called mutual savings banks meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization like the members of a credit union or the policyholders of a mutual insurance company. While it is possible for an S&L to be a joint-stock company, and even publicly traded, in such instances it is no longer truly a mutual association, and depositors and borrowers no longer have membership rights and managerial control. By law, thrifts can have no more than 20 percent of their lending in commercial loans — their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns such as the deep one the U.S. has experienced since 2007.

The most important purpose of these institutions is to make mortgage loans on residential property. These organizations, which also are known as savings associations, building and loan associations, cooperative banks (in New England), and homestead associations (in Louisiana), are the primary source of financial assistance to a large segment of American homeowners. As home-financing institutions, they give primary attention to single-family residences and are equipped to make loans in this area.

Some of the most important characteristics of a savings and loan association are:

1. It is generally a locally owned and privately managed home financing institution.

2. It receives individuals' savings and uses these funds to make long-term amortized loans to home purchasers.

3. It makes loans for the construction, purchase, repair, or refinancing of houses.

4. It is state or federally chartered.

26. Credit unions

A credit union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members. Many credit unions also provide services intended to support community development or sustainable international development on a local level.

Worldwide, credit union systems vary significantly in terms of total system assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with assets worth several billion US dollars and hundreds of thousands of members. Credit unions operate alongside other mutual and/or co-operative organisations engaging in cooperative banking, such as building societies.

In the credit union context, "not-for-profit" is not the same as for a "non-profit" charity or similar organization. Credit unions are "not-for-profit" because their purpose is to serve their members rather than to maximize profits.

Credit unions must make enough surplus to cover expenses, otherwise, like any other business, they cannot continue. They can and do become insolvent and cease to exist; the effect on those with funds deposited varies between jurisdictions.

Several factors combine to put credit unions at risk of failure. They may not be allowed to lend enough money to enough people who are willing and able to repay because of their rules on responsible lending. When debtors get into trouble, they will often repay liabilities such as payday loans with high interest rates first, leaving the credit unions until last. And in some cases courts may, after ruling against debtors, leniently allow them to pay off their debts with very small payments, sometimes free of interest, over a long period.

Credit unions as such provide service only to individual consumers. Corporate credit unions (also known as central credit unions in Canada) provide service to credit unions, with operational support, funds clearing tasks, and product and service delivery.