A credit union is a nonprofit, cooperative financial institution owned and run by its members. Organized to serve, democratically controlled credit unions provide their members with a safe place to save and borrow at reasonable rates. Members pool their funds to make loans to one-another. The volunteer board that runs each credit union is elected by the members. Not for profit, not for charity, but for service is a credit union motto.
Formed to Provide Credit to People of Small Means
From their early origins, credit unions were unique depository institutions created, not for profit, but to serve members as credit cooperatives. The earliest financial cooperatives date back to the beginning of 19th century in England. However, in the mid-1800's Germany was the home of the first credit unions as we know them today:
These early German credit unions were organized by Herman Schulze-Delitzsch and Friedrich Raiffeisen. The crop failure and famine of 1846 caused Schulze-Delitzsch to organize a cooperatively-owned mill and bakery which sold bread to its members at substantial savings. Schulze-Delitzsch took this cooperative notion to address the needs of credit. In 1850, he organized the first cooperative credit society, known as the "people's bank."
Raiffeisen goal was to provide credit to farmers. Raiffeisen formed the Heddesorf Credit Union in 1864 to help German farmers purchase livestock, equipment, seeds, and other farming needs.
In 1900, the credit union concept crossed the Atlantic to Levis, Quebec, where Alphonse Desjardins organized La Caisse Populaire de Levis. A court reporter, Desjardins became aware of the outrageous interest being charged by loan sharks and organized the credit union to provide relief to the working class.
In 1909, Desjardins helped a group of Franco-American Catholics in Manchester, New Hampshire organize St. Mary's Cooperative Credit Association--the first credit union in the United States.
Spurred by the attention of Edward Filene, a merchant and philanthropist, and Pierre Jay, the Massachusetts Banking Commissioner, the Massachusetts Credit Union Act became law on April 15, 1909. The Massachusetts law has served as a basis for subsequent state credit union laws and the Federal Credit Union Act.
With the upswing of the U.S. economy in the 1920's, the credit union movement became increasingly popular. People had more money to save and were able to afford products such as automobiles and washing machines. However, they needed a source of inexpensive credit. Because commercial banks and savings institutions were not generally interested in providing consumer credit, credit unions began growing.
In 1920, Roy Bergengren, a poverty lawyer, was hired by Edward Filene to manage the Massachusetts Credit Union Association to promote the development of credit unions in that state. Within a year, Massachusetts chartered 19 new credit unions.
Encouraged by this success, Filene organized and Bergengren managed a national association to promote credit unions throughout the country: the Credit Union National Extension Bureau. By 1925, 26 states had passed credit union legislation. By 1930, that number grew to 32 states with a total of 1,100 credit unions.
In 1934, President Roosevelt signed the Federal Credit Union Act into law, authorizing the establishment of federally chartered credit unions in all states. The purpose of the federal law was "to make more available to people of small means credit for provident purposes through a national system of cooperative credit..."
In the Congressional debate over the Federal Credit Union Act, neither the Comptroller of the Currency nor the Federal Reserve Board wanted to oversee federal credit unions. Eventually the Farm Credit Administration agreed to take the responsibility. Regulatory responsibility shifted over the years to include bureaus within the Federal Deposit Insurance Corporation, the Federal Security Agency, and the Department of Health, Education and Welfare.
Credit unions grew steadily in the 1940s and 1950s, and by 1960 credit union membership amounted to more than 6 million people at over 10,000 federal credit unions.
In 1970, the National Credit Union Administration 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.
The 1970s brought major changes in the products offered by financial institutions and credit unions found that they, too, needed to expand their services. In 1977, legislation brought expanded services to credit union members, including share certificates and mortgage lending. In 1979, a three-member Board replaced the NCUA administrator. In the same year, Congress created the Central Liquidity Facility, the credit union lender of last resort. The 1970s were years of tremendous growth in credit unions. The number of credit union members more than doubled and assets in credit unions tripled to over $65 billion.
Deregulation, increased flexibility in merger and field of membership criteria, and expanded member services characterized the 1980s. Today, over 12,000 credit unions with $316 billion in assets serve 70 million people in the United States. More and more people join credit unions every year and they are pleased with the service. Credit unions have rated No. 1 in customer satisfaction at financial institutions for 10 years according to the American Banker Newspaper's annual customer satisfaction survey.
To join a credit union, you must be eligible for membership. Each institution decides who it will serve. Most credit unions are organized to serve people in a particular community, group or groups of employees, or members of an organization or association.
Home |LCU info | Savings | Loans | 24 hour access | ATM/Debit Cards | Passport Club | Board/Employees | Online Services
Laclede Credit Union 3401 East Broadway Alton Il. 62002 Phone: 618-465-2504 Fax: 618-465-1542
www.lacledecu.com email:webmaster@lacledecu.com