The History of Credit Unions

The credit union movement began with a simple idea: People could achieve a better standard of living for themselves and others by pooling their savings and making loans to neighbors and co-workers.

1800s

• 1844 — Rochdale, England — Workers and weavers create a democratic consumer cooperative establishing the credit union principles used today.

• 1849 — Germany — Hermann Schulze-Delitzsch, a lawyer, establishes a credit society to help shopkeepers and urban workers find relief from loan sharks. Friedrich Raiffeisen, considered the German founder of credit cooperatives, also actively works to ensure better financial services for the working class.

Early 1900s

• 1901 — Lévis, Quebec, Canada — The first North American credit union is established, when Alphonse Desjardins organizes La Caisse populaire de Lévis. A former journalist and the French-language stenographer for the Canadian House of Commons, Desjardins became aware of moneylenders charging outrageous interest. In response, he organized this first credit union to provide affordable credit to working-class families.

• 1909 — Manchester, New Hampshire — The first U.S. credit union is established, when Desjardins helps a group of Franco-American Catholics organize St. Mary’s Cooperative Credit Association.

• April 15, 1909 — Massachusetts — As a result of the efforts of Edward A. Filene, a wealthy merchant considered the “father of U.S. credit unions,” and Pierre Jay, the Massachusetts Banking Commissioner, the Massachusetts Credit Union Act becomes law. The Massachusetts law served as a basis for subsequent state credit union laws and for the Federal Credit Union Act, which became law 25 years later.

• 1921 — Boston, Massachusetts — Filene and Roy F. Bergengren, a lawyer, organize the Credit Union National Extension Bureau, with goals to enact credit union laws and form credit unions. Filene’s ideas stemmed in part from a 1907 visit to India where he observed a system of agricultural cooperatives.

• 1924 — Boston, Massachusetts — Joseph Stern, an artist at the Boston Herald, creates the “Little Man Under the Umbrella” as the first logo of the credit union movement. During World War II, the “Little Man” appeared in uniform, carrying a knapsack and a rifle, and he also rode on a tank!

• 1934 — Washington, D.C. — President Franklin D. Roosevelt signs the Federal Credit Union Act into law — passed in large part due to Texas Sen. Morris Sheppard and Texas Rep. Wright Patman. A service organization, the Credit Union National Association (CUNA), forms to provide insurance, auditing and supplies to credit unions.

• 1946 — Women gain prominence in the credit union movement, as Dora Maxwell organizes 120 credit unions in New York City in a five-month period. Other women prominent in the movement during this period include Louise Herring, Evelyn Higgins and Agnes Gartland.

• 1948 — The first national Credit Union Day is celebrated on the third Thursday of October. The observance grew into International Credit Union Day^®.

1960s

• 1960 — The credit union movement grows steadily in the 1940s and 1950s. By 1960, credit union membership amounts to more than 6 million individuals belonging to more than 10,000 federal credit unions.

• 1967 — Washington, D.C. — The National Association of Federal Credit Unions (NAFCU) is established to protect the federal credit unions’ interests in the nation’s capital.

1970s

• 1970 — The National Credit Union Administration (NCUA) forms to oversee federal credit unions. Congress also creates the National Credit Union Share Insurance Fund (NCUSIF) to protect deposits at credit unions. The 1934 Federal Credit Union Act is amended to authorize federal insurance for members’ savings accounts.

• 1977 — A few select credit unions began offering Visa credit cards in a pilot program.

1980s

• 1980 — Deregulation in the financial services industry creates new product offerings like share drafts (also known as checking accounts) and individual retirement accounts (IRAs). Plus, a rate ceiling on savings accounts is removed.

• 1982 — NCUA interprets the Federal Credit Union Act to allow individual select employee groups to join a credit union, as long as members in each group share a common bond (i.e., manufacturing, high-tech, education, etc.).

1990s

• 1990 — In conjunction with four North Carolina banks, the American Bankers Association (ABA) files suit against NCUA and the AT&T Family Federal Credit Union over the 1982 interpretation of the Federal Credit Union Act. Bankers are concerned with the authorization to allow select employee groups to join AT&T Family Federal Credit Union who are unrelated to the original credit union sponsor and don’t necessarily share that common bond. The bankers appeal the lower court ruling that favored credit unions.

• 1996 — Following an adverse ruling from the U.S. Court of Appeals for the District of Columbia Circuit, an injunction is issued prohibiting federal credit unions from taking in members unrelated to their “core” membership group and common bond. This ruling is appealed to the Supreme Court and a partial stay is issued permitting members to sign up in existing “unrelated” employee groups, but prohibits new employee groups from being added.

• Feb. 25, 1998 — In a 5-4 vote, the Supreme Court rules against consumer choice by upholding the appeals court decision. The Supreme Court rules that banks have a stand in suing NCUA.

• March 26, 1998 — The House of Representatives Banking Committee unanimously passes H.R. 1151, the Credit Union Membership Access Act, which protects consumers’ rights to join credit unions.

• April 1, 1998 — The full House passes H.R. 1151 by a vote of 411-8.

• July 28, 1998 — The Senate’s version passes with a vote of 92-6, culminating in a rewrite of the 1934 Federal Credit Union Act.

• Aug. 7, 1998 — President Bill Clinton signs the Credit Union Membership Access Act into law, giving federal credit unions the authority to add select employee groups with 3,000 or less employees/members, even if they don’t have a relationship with a credit union’s original sponsor.

2010s

• July 21, 2010 — President Barack Obama signs into law the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amends the Federal Credit Union Act to permanently increase insurance of share accounts to $250,000.