The Credit Union
Movement:
A History Of
People Helping People
What Is A Credit Union?
• Cooperative financial institution where
people conduct financial transactions
• Members pool their assets to provide
funds for loans and a variety of other
financial services
• NOT a bank
• Not driven by profit
Credit Union Motto:
Not for profit,
Not for charity,
But for service
The Core Characteristics
Of Credit Unions:
• Owned by their members
• Only serve members from defined fields – such as where
they work, live, or worship
• Operate democratically: one member-one vote
• Not-for-profit – credit unions do not make money for
anyone but their members
• Provide financial products and services to improve the
quality of life for the benefit of their members
• Return would-be profits to members in the form of lower
rates on loans and higher dividends on savings products
A World-Wide System
Centered On The Member
World Council of Credit Unions
US Central
CUNA, Inc.
League
CUNA Mutual
State Corporate
Chapter
Credit Union
Member
How It All Began:
• Our roots are in the
cooperative movement
• Organized in Rochdale,
England in 1844
• Goal: Service to members
• The credit union idea caught
on in Canada in 1901
• The United States followed in
1908
Credit Union Timeline
1850
People’s
Bank
in Germany
1901
Start of 1st
credit union
in North
America
1953
1969
U.S. credit
unions peak
at 23,000+
1st
CUNA creates
World Extension
Division (later
CUNA
International)
1908
1934
credit union
organized in
Manchester,
New
Hampshire
Credit Union
National
Association
(CUNA) is
formed
1970
1996
Today
World Council
of Credit
Unions
formed
CUNA’s board
adopt Renewal
Project, changes
governance
structure
More than 89
million
Americans are
credit union
members
1st
1935
CUNA
Mutual is
formed
European Cooperatives
All that remains today of the original Toad Lane in
Rochdale---now a conservation area with the original
Rochdale Pioneers' store as a museum.
• A group of weavers in
Rochdale, England
established the Rochdale
Society of Equitable
Pioneers in 1844.
• They sold shares to
members to raise capital
to buy goods at lower
than retail prices, and
then they sold the goods
at a savings to members.
Hermann Schulze-Delitzsch
(Shoolts’-eh-Day’-litch)
•
•
•
•
Founded the first credit society in
1850 in Germany.
After some trial and error, the
initial “loan association” came to
closely resemble the credit unions
of today.
Spent the rest of his life organizing
“people’s banks.”
Only nine years after launching his
first credit cooperative, there were
183 people’s banks with 18,000
members in the German provinces
of East Prussia and Saxony.
Hermann Schulze-Delitzsch
(1808-1883)
Friedrich W. Raiffeisen
(Rt’-ft-sen)
• Considered the “father of the
credit union movement.”
• In 1846 organized the
Heddesdorf CU in Germany.
• Founded rural cooperatives
(loan societies) to aid poor
farmers.
• Organized the first central
banking association to meet
the liquidity needs of member
credit societies.
• Formed 425 credit societies.
(1818-1888)
Alphonse Desjardins
(Day-zhar-dan’)
•
Alphonse Desjardins
(1854-1920)
•
•
•Desjardins house and first
Canadian Credit Union.
•Third time ever a
Canadian 10-cent coin
commemorates a
significant historic event.
•
A reporter outraged by testimony
about lending money with an
interest rate.
Operated the first financial
cooperative in Canada out of his
home.
First deposit was 10 cents, but
within six years, the credit union
made loans totaling $200,000
without losing a penny.
He continued to organize many
credit unions in Canada. By 1914,
there were 150 cooperatives.
Edward A. Filene
• While traveling in 1907, he
discovered financial
cooperatives operating in
small villages in India.
• Provided the vision and
financial support that made
the growth of credit unions
possible in the United States.
• Personally contributed
more than $1 million (that
would be comparable to
donating over $20.5 million
today).
Edward A. Filene
(1860-1937)
Roy Bergengren
(Ber-gin-gren)
• In 1920, Filene hired
Massachusetts attorney, Roy
Bergengren, to help seek
increased state and federal
legislation to promote credit
unions.
• Director and co-organizer of
the Credit Union National
Extension Bureau (CUNEB)
in 1921.
• Helped launch U.S.
movement’s involvement in
international development.
(1879-1955)
The Bridge - CU Magazine
• The Bridge (now Credit Union
Magazine) – a members’
magazine that served as the
official voice of the movement
– was first published in 1924.
• The magazine has evolved
from a four-page, black-andwhite pamphlet to a four-color
monthly with more than 1,200
pages a year.
• Today, CU Magazine has the
largest circulation in the credit
union industry.
Federal Credit Union Act
• In 1934, Congress passed a federal credit union act
which permitted credit unions to be organized anywhere
in the United States.
• The legislation allowed credit unions to incorporate
under either state or federal law, a system of dual
chartering that persists today.
• President Franklin D. Roosevelt signed the Federal
Credit Union Act into law in June 1934.
CUNA Is Formed
• In 1934, the credit union idea spread so fast that credit unions
and leagues recognized the need for a national organization.
• The Credit Union National Association (CUNA) was formed as a
confederation of state leagues at a meeting in Estes Park, Colo.
• CUNA replaced the Credit Union National Extension Bureau and
Roy Bergengren became CUNA's first managing director.
CUNA Mutual
• CUNA tackled its first task: Insurance for
credit unions and members.
• In 1935, CUNA created the CUNA Mutual
Insurance Society to provide for those needs.
• Developed a loan protection insurance policy
and then life savings insurance.
• CUNA Mutual Insurance Society is the parent
organization of all the companies that
comprise the CUNA Mutual Group.
CUNA Mutual
• Today:
– CUNA Mutual Group is the leading provider of financial
services to credit unions and their members worldwide
– 5,500 employees worldwide, with more than 2,000 in
Madison, Wisconsin
• Product offerings:
– Lending: cost-effective methods to improve CU lending
– Investment management: to create financial strength and
stability for CUs and their members
– Employee benefits: to help recruit and retain the right people
with benefits packages, tools, and support
– Protection: provides insurance, risk management, and
innovative solutions
– Members: offers CUs insurance and investment needs for
their members
Growth Around The Globe
• In 1954, CUNA established an international services
department (World Extension) to extend its reach
beyond North America. There was, as yet, no central
worldwide organization of credit unions.
• This changed in May 1964, when CUNA revised its
charter to become CUNA International, taking under
its wing credit unions and associations in Canada,
Latin America, and elsewhere.
Credit Union Bill
• November 1963:
President John F. Kennedy
signs the CU Bill into law on
International CU Day. The bill
allows federal credit unions
greater operating flexibility.
• Also, CUNA prepares to
change its name to CUNA
International, in recognition of
its overseas responsibilities.
Soon after, President Kennedy
was assassinated on Nov. 22,
1963.
WOCCU
•
The rapid growth of credit unions in other parts of the world and in
emerging nations led to the creation of the World Council of Credit
Unions in 1970. CUNA once again became a national organization and
joined confederations in Canada, Africa, Asia, Australia, Latin America,
and the Caribbean as members of the World Council.
•
National and regional confederations concentrate on development and
guidance of credit unions in their areas; the World Council emphasizes
overall progress and continuing unity of the worldwide movement.
Organizational Expansion
• In 1970, the National Credit Union Administration (NCUA) was
created to charter and supervise federal credit unions, and the
National Credit Union Share Insurance Fund (NCUSIF) was
organized to insure credit union deposits.
• In the independent credit union spirit, the NCUSIF was created
without tax dollars and capitalized solely by credit unions.
Opportunity And Challenge
• The 1980s began with double-digit inflation, a
recession, and high interest rates. Despite all that,
the credit union movement continued to grow.
• The number of credit unions dropped in the 1980s,
which was the result of company-sponsored credit
unions going out of business or mergers of smaller
credit unions with larger ones.
• Assets grew steadily, rising at about 20% each year.
Operation Grassroots
• In the early 1990s, banker attacks were
countered by Operation Grassroots, a
fight-back campaign that culminated in
February 1991 with a rally that drew almost
13,000 credit union supporters to the Capitol
Mall in Washington, D.C.
Consumer Choice
•
•
•
•
July 1996: the D.C. Court of
Appeals ruled against NCUA’s
policy allowing credit unions to
serve multiple common bonds in
one field of membership.
The credit union movement rallied
support once again, calling the
effort The Credit Union Campaign
for Consumer Choice.
The campaign was successful in
gaining a Supreme Court hearing
on the field of membership issue.
The passage of H.R.1151, the
Credit Union Membership Access
Act, was absolutely essential.
H.R. 1151
• Aug. 7, 1998, President
Clinton signed The Credit
Union Membership
Access Act (H.R. 1151).
• This once again allowed
federal credit unions to
reach out to new
members, such as small
businesses and lowincome communities, that
had been locked out by
the narrow U.S. Supreme
Court ruling.
The Credit Union System
CUNA-Affiliated Credit Unions
Leagues and
League Service Corporations
Corporate
Credit Unions
Credit Union
National Association
(CUNA)
Association of
Corporate Credit Unions
(ACCU)
CUNA-related organizations
U.S. Central
World Council of Credit Unions
(WOCCU)
CUNA Mutual
Credit Unions Vs.
Other Financial Institutions
Credit Union
• Not-for-profit
cooperatives
• Owned by members
• Operated by mostly
volunteer boards
• Charge lower and fewer
service fees
• Pay higher saving rates
• Charge lower loan rates
Other Financial Institutions
• For-profit corporations
• Owned by outside
stockholders
• Controlled by paid boards
• Charge higher and more
service fees
• Pay lower saving rates
• Charge higher loan rates
Fun Credit Union Facts
Did you know:
– More than 1 of every 3 adults in the United
States belongs to a credit union?
– In the last 35 years, the number of members
has more than tripled:
• 1970 = 23 million members
• Today = over 89 million members
The Credit Union Way
Credit unions were founded for humble reasons:
– Give people a place to save
– Give people a place to borrow at a reasonable cost
As times change, so do credit unions.
When new financial service needs surface, credit
unions find ways to satisfy their members’ needs.
Credit unions remember their mission!
Definitions
Common bond: Group sharing certain characteristics that
set them apart from the general public and give them
some common interest.
Cooperative: Business voluntarily owned and controlled by
its members, and operated for and by them on a
nonprofit or cost basis. It is organized and incorporated
to engage in economic activities with certain ideals of
democracy, social consciousness, and human relations.
Field of membership: Group of people who qualify as
members of a credit union, limited by the law to those
who have a common bond.
Test your credit union history
knowledge!
THE END