The first true credit unions were founded in Germany in 1852 and 1864. As the 20th century began, the credit union idea surfaced in Canada, where in 1900, Alphonse Desjardins organized a credit union (caisse populaire) in Levis, Quebec. As in Germany 50 years before, people were poor, interest rates were financially crippling, and the credit union offered a way out.
That first Canadian credit union was small by modern standards. The first savings deposit was only 10 cents; the first collection from all the members totaled only $26.
Desjardins devoted a good part of his life to credit union development in North America. He founded other credit unions, including the first one in the United States, in 1909 in New Hampshire.
Canada’s successful efforts profoundly influenced two Americans: Pierre Jay, the Massachusetts banking commissioner, and Edward A. Filene, a Boston merchant. Filene discovered credit unions in a village in India in 1907. He had stopped in Calcutta and met a government official who took Filene out into the countryside. There Filene first observed a village credit union in operation and immediately was interested. Back home again, he began reading about credit unions to strengthen his knowledge. The two men helped organize public hearings on credit union legislation in Massachusetts, leading to passage of the first state credit union act in 1909.
By 1934, credit unions and leagues recognized the need for a national organization. At a meeting at Estes Park, Colorado, the Credit Union National Association (CUNA) was formed as a confederation of state leagues. When President Franklin D. Roosevelt signed the Federal Credit Union Act into law, the stated purpose was to "promote thrift and thwart usury." 1
1 Source: Credit Union National Administration (CUNA.org)
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A Brief History of Bank Attacks on Credit Unions
In 1998, the banking industry attempted to limit credit unions' ability to expand their fields of membership in order to accommodate changes in their communities. Banks attacked credit unions with litigation that found its way to the U.S. Supreme Court, which interpreted the law in favor of banks.
Following the Supreme Court ruling, credit unions approached elected representatives and asked for the law to be changed to reflect their unique needs as they adapted to their changing surroundings. Credit unions had to undertake this challenge against a withering assault of bank propaganda aimed at influencing the representatives.
Based on the response of the 70 million credit union members affected by this legislation, the law was ultimately changed with implementation of Bill Number H.R.1151, the Freedom of Membership Act, with an overwhelming vote of 711-8 in the House of Representatives and 92-6 in the Senate.
Since that time, the banks have continuously aimed their propaganda machine and their megabucks lobbying agents at our legislators in an attempt to destroy credit unions as competition, by trying to convince representatives that credit unions are too big, have outlived their usefulness, or are not true to their charters and pose unfair competition for the banks. Larger credit unions such as SCCU, which have grown by continually providing value to their member-owners, are particular targets.
The banking lobby has mounted a full-scale assault against the modernization of some of the regulatory definitions affecting credit unions. For example, the bankers are trying to convince you and your elected representatives that credit unions should be governed by Community Reinvestment Act (CRA) requirements, as are banks. To fully understand the absurdity of this ploy, it is helpful to understand what CRA is and does.
Years ago, banks undertook predatory practices, wherein they would collect deposits from non-affluent communities and use those acquired assets to invest in other communities. This continued practice of draining the resources of non-affluent communities had significantly impeded opportunities for growth and wealth building in those communities. This practice went on for many years until the government stepped in with the passage of CRA, and now requires banks to track the reinvestment being made in the communities in which they operate.
Having been leashed, the banks are now claiming that credit unions have an unfair advantage because they do not demonstrate how much they give back to the communities. Compare this to ravenous wolves now demanding that the shepherd, who has always lived among the flocks and never anywhere else, be forced to demonstrate the value he provides to the flock.
The very nature of a credit union represents community reinvestment, since members wholly own their credit union. We reinvest in the community with every transaction and every decision. Our behaviors are governed by our structure, not by a government dictate.
The specific subject of the current attack is not particularly important. What is important is to understand what is at stake: That credit unions will be subjected to a series of unnecessary legislative burdens, under the guise of protecting the consumer, in the hope that by the time the 87 million Americans who depend on credit union services notice, it will be too late, and this member-owned option will have been legislated out of existence.
Thankfully, there are legislators who recognize the value that credit unions offer to their communities. SCCU, in partnership with the Florida Credit Union League, will provide you with the names of legislators who are known supporters of credit unions.
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