The Credit Union Movement in the US

When Henry Wolff, an English economist, penned a book called People’s Banks, touting the benefits of cooperative financial institutions, he probably had no idea that the concept would someday result in a worldwide system of approximately 86,000 credit unions with more than 290 million members around the world. The following is the inspiration and innovation that shaped the modern credit union industry in the United States.

"The Credit
Union is above all an institution aiming at the betterment of its members, rather than profits"

- Alphonse Desjardins


Concerned that many French-Canadian congregants of St. Mary’s Church have no secure place to keep their earnings and no access to credit, Monsignor Pierre Hevey enlists the help of Canadian journalist Alphonse Desjardins in establishing the first credit union in Manchester, New Hampshire.


Desjardins joins with Pierre Jay, Massachusetts Commission of Banks, and philanthropist Edward A. Filene to advocate for the establishment of a “cooperative credit” association in Boston, where working class employees of companies are attempting to establish their own savings and loan associations. On April 15, the Massachusetts legislature passes the first credit union law.


Edward Filene, Felix Vorenberg, Judge Abraham Cohen and Max Mitchell support legislation that charters the Massachusetts Credit Union Association (MCUA), whose mission is to “disseminate information in respect to the benefits of credit unions… to organize credit unions… to make loans to credit unions… and to promote and assist credit unions.”


Filene hires Roy Bergengren as managing director of the MCUA and Bergengren launches 19 new credit unions in 1920 alone. The following year, Filene and Bergengren create the Credit Union National Extension Bureau to promote the formation of credit unions across the nation. The Credit Union League of Massachusetts (CULM) was also founded in 1921.


In June, the Federal Credit Union Act is signed into law by President Franklin D. Roosevelt, which allows the creation of federally chartered credit unions. Bergengren convenes a conference in Estes Park, Colorado and forms the Credit Union National Association (CUNA). In 1937, Roosevelt signs legislation exempting federal credit unions from taxes on their working capital.


President Harry S. Truman signs federal legislation increasing the limit of unsecured loans and allowing joint accounts, and he applauds credit unions for helping their members “solve their own money problems by encouraging thrift and the wise use of credit [and by contributing] to the welfare not only of their own groups, but also of the whole nation.”


International Credit Union (ICU) Day is established and celebrated every third Thursday of October moving forward. The ultimate goal is to raise awareness about the tremendous work that credit unions and other financial cooperatives are doing around the world and give members the opportunity to get more engaged.

All of the remarkable success which has come to credit unions has come to them not because they did things which were being done, but because they did things which were needed, and were not being done. – Edward A. Filene



President Dwight D. Eisenhower signs legislation that increases the legal amount of signature loans and extends payment periods. In Massachusetts, the need for insuring shares and deposits is widely acknowledged, and the issue of which strategy to pursue – stabilization funds or share insurance – becomes acrimonious.


Massachusetts resolves the “stabilization fund or share insurance” issue in favor of share insurance: MSIC is created by an Act of the Massachusetts legislature in March 1961 and becomes the first insurer of credit union shares and deposits in the US. Subsequently, many other states follow the MSIC model and create insurance funds. Other legislation, which improves lending practices, terms and amounts, is embraced by supporters of President Lyndon B. Johnson’s War on Poverty, and credit unions are created to support federal efforts to assist residents in impoverished areas of the country.


The US Congress creates the National Credit Union Administration (NCUA), funded through fees paid by credit unions rather than by taxes. Congress also passes a share insurance bill, which insures accounts in federal credit unions up to $20,000. Additional legislation broadens the services that credit unions can provide.


President Jimmy Carter supports and signs The Depository Institutions Deregulation and Monetary Control Act, which allows credit unions to issue share drafts, raises share insurance limits, and deregulates interest rates.


The New England Banking Crisis and the collapse of the Rhode Island Share Deposit Insurance Corporation (RISDIC) threatens a loss of consumer confidence in all regional financial institutions. In Massachusetts, MSIC converts to an excess insurer and all Massachusetts credit unions are required to obtain NCUSIF primary share insurance. In spite of the difficulties, the Massachusetts credit union industry remains healthy, and the industry successfully makes the transition to federal primary insurance. Congress passes the Credit Union Membership Access Act, allowing credit unions to broaden their membership base.


The Credit Union Membership Access Act of 1998 was signed into law by President Bill Clinton, which restored membership flexibility to credit unions.


The industry celebrates the 100th anniversary of the nation’s first credit union, La Caisse Populaire Ste -Marie in Manchester, New Hampshire.


President Barack Obama signs into law the Dodd-Frank Wall Street Reform and Consumer Protection Act which amends the FCU Act to make permanent the standard maximum share insurance amount of $250,000.


The credit union industry continues to fulfill its original motto, “Not for profit, not for charity, but for service,” built around the idea of providing not-for-profit financial services in the spirit of community and cooperation. Credit unions work to not only provide fairly priced, accessible financial services and member education, but also giving their time and resources to supporting important causes to their members and their communities.

Not for profit, not for charity, but for service.
– The Credit Union Founding Slogan