The first U.S. credit union opened in 1909. From the beginning, credit unions followed a unique concept. Credit Unions were created not for profit, but to serve members as credit cooperatives. Since then, over 100 years have passed, and there are 6,557 credit unions in the United States serving over 102 million members. Oak Tree wants to celebrate the first 100 years of credit unions’ history by looking back at how credit unions were started.
The Beginning
The creation of credit unions is credited to Friedrich Wilheim Raiffeisen, the major of a small German town whose residents were struggling financially. His idea was to create a small pool of the community’s money that would allow the residents to get small loans at a low-interest rate. This idea later spread to other countries expanding throughout Europe, India, and making its way to Canada in 1901.
Credit unions later expanded into the United States in 1909, with the first credit union opening in New Hampshire. This same year, Massachusetts passes the first state credit union law, which is the Massachusetts Credit Union Act. In the 1920s, credit unions gained popularity in the U.S. as demand for loans grew when people sought loans to buy cars and large household appliances. Credit unions saw a large need in the market for low-interest loans, so they began promoting credit unions to the public, and soon after Massachusetts opened up 19 new credit unions.
By seeing what a great demand there was for credit unions in the market, philanthropist Edward Filene “organized and Roy Bergengren managed a national association—the Credit Union National Extension Bureau—to promote the establishment of credit unions throughout the United States” (NCUA). In 1934 President Roosevelt passed The Federal Credit Union Act. Growth for credit unions was steady during the ’40s, ’50s, and ’60s. In 1970, the National Credit Union Share Insurance Fund allowed federal deposit insurance to be extended to credit unions. Also, in 1970, the NCUA was founded to regulate credit unions.
The 1970s
In 1977, more laws were passed that allow credit unions to offer more services to their members. The ’70s was an extraordinary decade for credit unions, as they nearly doubled the number of credit union members during that period of time. The 1980s showed hard times in the United States with double-digit inflation, a recession, and high-interest rates, but credit unions still continued to grow. Assets grew steadily despite the fact that the number of credit unions dropped due to mergers. The 1990s brought more changes to credit unions with the Membership Access Act and the signing of the Credit Union Membership Access Act by President Clinton in 1998. In 2008, credit unions endured the 2008 recession and by 2014 there were over 100 million credit union members in the United States.
Today credit unions remain strong and follow the same philosophy that they were founded on over 100 years ago.
The distinguishing features include:
- Democratic governance
- Each member has one vote, regardless of the size of the member’s deposits
- Member-elected board of directors
- Volunteer-based
Oak Tree is passionate about the credit union movement and has also reached an important milestone. Founded in 1983, we have long been a part of this community and a trusted vendor to hundreds of credit unions across the United States. When you are ready for the best credit union forms available, contact us.
Sources:
“A Brief History of Credit Unions.” National Credit Union Administration. Web. 13 July 2015. “Credit Unions: A Timeline (1909-Present).” American Bankers Association. Web. 13 July 2015. “CU History & FAQS.” Carolinas Credit Union League. Web. 13 July 2015. “History of the Credit Union Movement.” Minnesota Credit Union Network. Web. 13 July 2015.
