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The Credit Union Movement: A History Of People Helping People
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Page 1: The Credit Union Movement: A History Of People Helping People.

The Credit Union Movement: A History Of

People Helping People

Page 2: 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

Page 3: The Credit Union Movement: A History Of People Helping People.

Credit Union Motto:

Not for profit,

Not for charity,

But for service

Page 4: The Credit Union Movement: A History Of People Helping People.

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

Page 5: The Credit Union Movement: A History Of People Helping People.

A World-Wide System Centered On The Member

World Council of Credit Unions

Member

Credit Union

Chapter

CUNA, Inc. CUNA MutualUS Central

League State Corporate

Page 6: The Credit Union Movement: A History Of People Helping People.

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

Page 7: The Credit Union Movement: A History Of People Helping People.

Credit Union Timeline

1850 1st People’s

Bankin Germany

1901Start of 1st

credit union in North America

19081st credit union organized in Manchester,

New Hampshire

1934Credit Union

National Association (CUNA) is

formed

1935CUNA

Mutual is formed

1953CUNA creates

World Extension Division (later

CUNA International)

1969U.S. credit

unions peak at 23,000+

1970World Council

of Credit Unions formed

1996CUNA’s board adopt Renewal

Project, changes governance

structure

TodayMore than 89

million Americans are

credit union members

Page 8: The Credit Union Movement: A History Of People Helping People.

European Cooperatives• 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.

All that remains today of the original Toad Lane in Rochdale---now a conservation area with the original Rochdale Pioneers' store as a museum.

Page 9: The Credit Union Movement: A History Of People Helping People.

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)

Page 10: The Credit Union Movement: A History Of People Helping People.

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)

Page 11: The Credit Union Movement: A History Of People Helping People.

Alphonse Desjardins(Day-zhar-dan’)

• 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.

•Desjardins house and first Canadian Credit Union.

•Third time ever a Canadian 10-cent coin commemorates a significant historic event.

Alphonse Desjardins

(1854-1920)

Page 12: The Credit Union Movement: A History Of People Helping People.

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)

Page 13: The Credit Union Movement: A History Of People Helping People.

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)

Page 14: The Credit Union Movement: A History Of People Helping People.

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-and-white 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.

Page 15: The Credit Union Movement: A History Of People Helping People.

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.

Page 16: The Credit Union Movement: A History Of People Helping People.

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.

Page 17: The Credit Union Movement: A History Of People Helping People.

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.

Page 18: The Credit Union Movement: A History Of People Helping People.

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

Page 19: The Credit Union Movement: A History Of People Helping People.

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.

Page 20: The Credit Union Movement: A History Of People Helping People.

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.

Page 21: The Credit Union Movement: A History Of People Helping People.

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.

Page 22: The Credit Union Movement: A History Of People Helping People.

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.

Page 23: The Credit Union Movement: A History Of People Helping People.

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.

Page 24: The Credit Union Movement: A History Of People Helping People.

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.

Page 25: The Credit Union Movement: A History Of People Helping People.

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.

Page 26: The Credit Union Movement: A History Of People Helping People.

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 low-income communities, that had been locked out by the narrow U.S. Supreme Court ruling.

Page 27: The Credit Union Movement: A History Of People Helping People.

The Credit Union System

CUNA-Affiliated Credit Unions

Leagues and League Service Corporations

Corporate Credit Unions

Association of Corporate Credit Unions

(ACCU)

Credit Union National Association

(CUNA)

CUNA-related organizations

World Council of Credit Unions(WOCCU)

CUNA Mutual

U.S. Central

Page 28: The Credit Union Movement: A History Of People Helping People.

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

Page 29: The Credit Union Movement: A History Of People Helping People.

Fun Credit Union FactsDid 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

Page 30: The Credit Union Movement: A History Of People Helping People.

The Credit Union WayCredit 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!

Page 31: The Credit Union Movement: A History Of People Helping People.

DefinitionsCommon 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.

Page 32: The Credit Union Movement: A History Of People Helping People.

Test your credit union history knowledge!

Page 33: The Credit Union Movement: A History Of People Helping People.

THE END