Richard CanfieldPodcast Host and IBC Advisor, Ascendant Financial · Authorized Infinite Banking Practitioner | Author of 4 Books

Credit Unions vs. The Traditional Commercial Banks 🤔

18 Nov 2023 · 1 min

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A short conversational video (recorded Nov 18, 2023) in which Richard Canfield and another speaker compare credit unions with traditional commercial banks in Canada, focusing on differences in leverage and capital. The speakers state that traditional Canadian banks can leverage up to about 23 times their capital, while the (credit-union) organization represented by the speaker aims to keep capital around 8–8.5%. Lehman Brothers (2008) is cited as an extreme example of high leverage (~100:1).

Questions this video answers

About 23 times their capital.

Around 8–8.5%.

Approximately 100 to 1.

Chapters

There's a pretty distinctual difference. You were identifying between the credit unions versus, you know, the traditional commercial banks, at least in Canada.
As mentioned, capital is king. We need capital for everything we do. So you'll find that organizations that are over leveraged will definitely have a capital multiple much higher. So in traditional banks in Canada, they can go to a maximum about 23 times their capital. And us as an organization, typically like to keep it around 8, 8 and a half percent. So significantly less leveraged than other financial institutions. And just to give you a bit of a scope, like Leneman Brothers, when, when they blew up in 2008, they were leveraged 100 to 1. So that's sort of where you can get with your leverage, and it can cause significant problems if you are likely all experienced in your lives.