The Beginning of U.S. Credit Unions
Credit Union Milestones
The foundation for the credit union movement in the United States was laid by a handful of men who had a strong belief in "people helping people," which has now become the cornerstone for credit union philosophy. The credit union movement began in America as a cooperative effort among common people to pool their money and share it among one another.
A Massachusetts banking commissioner, Pierre Jay, and a Boston merchant, Edward A. Filene, became interested in credit unions in the 1900s, which were being formed in Canada by a man named Alphonse Desjardins. As banking commissioner, Jay monitored unauthorized banking practices in Massachusetts. He learned that several groups of employees in the commonwealth had started their own savings and loan clubs. Jay believed these associations were providing a needed service, but he wanted to recommend a way to make them legal.
Jay turned to the work of Desjardins, and in 1908 the two men met with Filene and other supporters in Boston. Desjardins and Jay then prepared the legislation for the first general state credit union act in the United States. It passed in 1909.
In 1921, Filene sought federal legislation and more state laws as a means to encourage the formation of more credit unions. He created the Credit Union National Extension Bureau and hired a Massachusetts attorney, Roy F. Bergengren, to help him. So committed was Filene that when the Bureau faced financial difficulties, he funded it with his own money.
Bergengren's role at the Bureau was to seek effective credit union laws in all states and at the federal level. When he brought his message to Iowa in 1923, the economic situation was not promising. Average workers were unable to save or borrow money, banks were failing, interest rates were high (anywhere from 42% to 250%) and people were looking for new solutions to their money problems. Bergengren was convinced our state was ready for a credit union organization. He worked with local supporters to sponsor a Credit Union Act, and it became effective July 4, 1925 in Iowa.
The law allowed groups to form credit unions in the state, which they did with enthusiasm. By late 1929, just before the stock market crash, Iowa had 37 credit unions; most with about 100 or 150 members each. Supportive legislation was being passed in other states as well, and the credit union movement continued to grow. Credit unions soon discovered they could further expand the growth of the credit union movement by joining together in leagues. These leagues, formed at the state level, provided financial and legal advice, spread the credit union philosophy, and organized supporters to gain favorable laws. The Iowa Credit Union League opened its doors in 1930 with a tiny staff in a downtown Des Moines office.
More than 75 years later, the Iowa credit union movement is still strong, vibrant alternative to for-profit banks, serving their nearly 1 million members, or one out of three Iowans.
CREDIT UNION MILESTONES
1920: Expansion of the credit union movement. The nation was in a time of prosperity, and people were able to borrow money for new consumer goods. Credit unions were viewed as a real alternative.
1925: Roy Bergengren and other credit union leaders created the Credit Union National Extension Bureau (CUNEB). CUNEB worked to pass state laws that would allow for the formation of credit unions, organize individual credit unions, and form state leagues.
1930s: In response to a depressed economy, credit union legislation was passed into Iowa law. The credit union movement began to grow in the state, and the Iowa Credit Union League was formed.
1940s: Post-war credit policies and availability of goods caused money to flow more freely into credit unions.
1950s: Credit union membership continued to grow as the public heard more about the movement.
1970s: State and national credit union organizations focused on legislative needs of credit unions at the grassroots level.
1975: Modernization Act passed, providing for classes of shares, permanent membership in a credit union, enlarged fields of membership, and a provision for Iowa League Corporate Central Credit Union.
1978: Legislation creating a separate credit union state agency was passed, removing credit unions from the regulatory control of bankers.
1979: Permanent share draft legislation was passed, allowing credit unions to offer share draft "checking" services to members.
1980s: Iowa legislature allowed credit unions to accept deposits of public funds. Investment powers of credit unions were expanded.
1990s: The Members Group (TMG) and Premier Systems Inc (PSI) were formed to deliver the products and services that allow Iowa's credit unions to provide competitive, quality financial services to members. H.R. 1151 was passed that states credit unions are tax exempt.
2000s: Community Business Lenders was formed to help strengthen Iowa credit unions and Iowa businesses. This company grants member business loans to credit union members throughout Iowa and is focused on retaining and expanding credit union membership.
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