Credit Unions a Haven in Mortgage Storm

That means credit unions were largely absent from the predatory lending practices that proliferated during the housing boom as mortgage brokers with no stake in the outcome of their loans preyed on easy-credit conditions and unsophisticated borrowers.

Credit unions instead tend to make loans on terms that consumers can meet over time, and generally don't offer so-called exotic mortgages that have huge resets in store for borrowers who won't be able to make the payments.

Widening Reach

Credit unions have historically provided credit access to people who would otherwise never be able to participate in a banking system, particularly those of modest means. In recent years, however, they've broadened their reach to all segments of society.

Aside from mortgage loans, the unions offer credit cards and many other banking services for which most consumers usually turn to the likes of Bank of America (BAC Quote) and Citigroup (C Quote). Credit unions' tax-free status allows them to generally offer higher rates of return on deposits with lower fees and lower rates on loans of all kinds.

For this reason, the banking industry is targeting the tax-free status of large credit unions, claiming they are operating like banks while they enjoy an unfair competitive advantage.

Credit unions counter that their cooperative structure makes them inherently different than a corporate bank, and with roughly 90 million members in the U.S., they have less than 10% of the market share for deposits -- a statistic that has been flat for the last decade.

"If we were really such a competitive threat to the banking industry, wouldn't we have picked up more market share than that?" asks Bill Hampel, chief economist with the Credit Union National Association.