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More to Know About Credit Unions

by Amy Nutt

Credit unions are financial institutions that are established by a group of men and women with a common bond. Credit Union Members combine their assets to offer loans and other financial services to other members. They are different from other banks and financial institutions in that they are not-for-profit cooperatives owned by outside stock holders and credit union members. Credit Union Boards are made up of mostly volunteers.

Credit Unions have had a rich and diverse history and have touched the lives of many of their members. The history of credit unions began in 1844 when a group of Weavers from Rochdale, England, formed the Rochdale Society of Equitable Pioneers. These men sold shares to members to raise money to buy goods at a lower price. They sold the purchased goods at a discount to their members, thereby creating the first credit union.

Hermann Schulze-Delitzsch was the pioneer who, in 1852, opened the first recognized credit union in Germany. There was one credit union located in Eilenburg and another in Delitzsch. The basic philosophies of the credit union were equality, responsibility, honesty, openness, and social responsibility.

By 1859, there were 183 credit unions consisting of 18,000 members in Posen and Saxony. In 1871, Schulze-Delitzsch led the fight for the passage of the national credit union law. By 1912, there were over 641,000 credit union members.

The first North American credit union was established in Canada in 1901. It was known as the Caisse populaire de Lvis in Qubec. Founder Alphonse Desjardins, a reporter in the Canadas parliament, founded the credit union in response to a Montreal resident who was instructed by the court to pay almost $5,000 in interest on a loan of $150. In 1908, the St. Mary’s Bank of Manchester, New Hampshire was the first credit union to open in the United States. It was originally called the St. Mary’s Cooperative Credit Association and was founded by French speaking immigrants from the maritime provinces of Canada. During the evenings, attorney Joseph Boivin managed the credit union from his home.

Edward Filene, a Bostonian merchant and philanthropist, and his associate Roy Bergengren, played a key role in establishing credit unions across the United States. Most US credit unions evolved from an employer-based bond. This permitted the credit unions to apply future paychecks as collateral.

In 1934, Congress passed a federal credit union act, which allowed credit unions to be established anywhere in the United States. .That same year, The Credit Union National Extension Bureau, was formed in Colorado. An attendee by the name of Dora Maxwell would eventually help establish credit unions and programs for the poor. As well, Louise McCarren became known as “Mother of Credit Unions” for her work creating credit unions.

In 1970, the National Credit Union Administration (NCUA) was created to charter and supervise federal credit unions

As a historical icon, credit unions have grown and expanded their memberships to millions of people. Every day, more people are joining their local credit union. They are discovering that the services as well as the investment are bringing great returns.

About the Author:
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May 22, 2009 | Filed Under Banking

 

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One Response to “More to Know About Credit Unions”

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