History of NCUA


FOR MORE THAN 100 YEARS,
CREDIT UNIONS HAVE PROVIDED FINANCIAL SERVICES TO THEIR
MEMBERS IN THE UNITED STATES, BUT WHAT IS THEIR
HISTORY? HOW DID THEY GET STARTED? AND WHAT IS NCUA? BEFORE THE MID-1800S,
BANK LOANS WERE A DREAM FOR MOST AMERICANS. UNLESS SOMEONE GUARANTEED
REPAYMENT, BANKS REFUSED MOST LOAN REQUESTS. IF MISFORTUNE STRUCK,
FARMERS AND SMALL BUSINESSES OFTEN WENT UNDER WITH NO
HOPE OF RECEIVING EVEN A MODEST LOAN TO RECOVER. THE CREDIT UNION MOVEMENT
GREW FROM A SIMPLE IDEA: BY POOLING THEIR SAVINGS AND
MAKING LOANS TO NEIGHBORS AND COWORKERS, PEOPLE COULD
ACHIEVE A BETTER STANDARD OF LIVING FOR THEMSELVES AND
OTHERS. THE CREDIT UNION MOVEMENT
BEGAN IN GERMANY. IN 1848, HERMAN
SCHULZE-DELITZSCH SET UP A CREDIT SOCIETY TO SERVE
SHOPKEEPERS AND OTHER URBAN WORKERS WHO HAD BEEN FORCED
TO PAY VERY HIGH INTEREST RATES CHARGED BY LOCAL LOAN
SHARKS. IN 1864, FREDERICH WILHELM
RAIFFEISEN ORGANIZED A SIMILAR COOPERATIVE FOR
FARMERS. THESE EARLY CREDIT UNIONS
BECAME THE MODEL FOR TODAY’S CREDIT UNIONS IN THE UNITED
STATES. THE KEY PRINCIPLES OF THE
MOVEMENT WERE: VOLUNTEERISM, SELF HELP, ONE MEMBER ONE
VOTE, CONSIDERATION OF A PERSON’S CHARACTER, AS WELL
AS NET WORTH. ALPHONSE DESJARDINS, A CANADIAN
JOURNALIST, PROVED INSTRUMENTAL IN BRINGING THE
MOVEMENT TO THE UNITED STATES. IN 1909, DESJARDINS AND
PIERRE JAY, THE MASSACHUSETTS COMMISSIONER
OF BANKS, PLAYED KEY ROLES IN GETTING THE FIRST LAW FOR
ORGANIZING CREDIT UNIONS ENACTED IN MASSACHUSETTS. THEY ALSO ASSISTED IN
ORGANIZING THE FIRST CREDIT UNION IN THE UNITED STATES,
ST. MARY’S COOPERATIVE CREDIT ASSOCIATION IN
MANCHESTER, NEW HAMPSHIRE. EDWARD FILENE WHO MANY
CONSIDER THE “FATHER” OF U.S. CREDIT UNIONS
AND HIS COLLEAGUE, ROY BERGENGREN, A
POVERTY LAWYER, BECAME CONVINCED
COOPERATIVE CREDIT COULD WORK IN THE UNITED STATES, A
BELIEF THAT WAS REINFORCED IN A SUBSEQUENT MEETING WITH
DESJARDINS. TOGETHER, FILENE AND
BERGENGREN ADVANCED LEGISLATION TO ISSUE CREDIT
UNION CHARTERS IN STATES ACROSS THE COUNTRY. IN 1921, THEY ALSO ORGANIZED THE CREDIT UNION NATIONAL
EXTENSION BUREAU. THE BUREAU’S MAIN GOALS WERE
TO ENACT CREDIT UNION LAWS, FORM NEW CREDIT UNIONS AND
PROMOTE THE GENERAL PHILOSOPHY OF CREDIT UNIONS. THROUGHOUT THE 1920S, CREDIT
UNIONS PROVIDED A SOURCE OF INEXPENSIVE CREDIT TO
PURCHASE PRODUCTS LIKE AUTOMOBILES AND WASHING
MACHINES. THE POPULARITY OF CREDIT
UNIONS GREW BECAUSE COMMERCIAL BANKS AND SAVINGS
INSTITUTIONS GENERALLY SHOWED LIMITED INTEREST IN
OFFERING SUCH CONSUMER LOANS. BY 1930, 32 STATES HAD
ADOPTED CREDIT UNION LAWS WITH A TOTAL OF 1,100 CREDIT
UNIONS. IN THE AFTERMATH OF THE START OF
THE GREAT DEPRESSION THE TIME HAD COME
TO CREATE FEDERAL CREDIT UNIONS. IN 1934, PRESIDENT FRANKLIN
DELANO ROOSEVELT SIGNED THE FEDERAL CREDIT UNION ACT
INTO LAW AUTHORIZING THE FORMATION OF FEDERALLY
CHARTERED CREDIT UNIONS IN ALL STATES. PRESIDENT FRANKLIN DELANO
ROOSEVELT: It means I am sure that the masses of the people of
the nation firmly believe that there is great and actual
possibility in an orderly recovery through a
well conceived and actively directed plan
of action. THE PURPOSE OF THE FEDERAL
LAW WAS TO MAKE CREDIT AVAILABLE AND PROMOTE THRIFT
THROUGH A NATIONAL SYSTEM OF NONPROFIT, COOPERATIVE
CREDIT UNIONS. THE FEDERAL CREDIT UNION
SECTION WAS ALSO FORMED, CREATING A NATIONAL SYSTEM
TO CHARTER AND SUPERVISE FEDERAL CREDIT UNIONS. THE CREDIT UNION SECTION WAS
FIRST HOUSED AT THE FARM CREDIT ADMINISTRATION, UNTIL
IT WAS TRANSFERRED TO THE DEPARTMENT OF AGRICULTURE IN
1939. THE CREDIT UNION SECTION
REMAINED A PART OF DEPT. OF AGRICULTURE UNTIL MAY
1942, WHEN THE FIRST WAR POWERS ACT WAS USED TO
TRANSFER THE SECTION TO THE FEDERAL DEPOSIT INSURANCE
CORPORATION. AS THE CREDIT UNION INDUSTRY
GREW, THE AGENCY MOVED FROM THE FEDERAL DEPOSIT
INSURANCE CORPORATION TO THE FEDERAL SECURITY AGENCY, AND
THEN FINALLY THE DEPARTMENT OF HEALTH, EDUCATION AND
WELFARE. AFTER 36 YEARS OF MOVING THE
REGULATORY FUNCTION FROM ONE AGENCY TO ANOTHER, CONGRESS
CREATED THE NATIONAL CREDIT UNION ADMINISTRATION ON
MARCH 10, 1970, AS AN INDEPENDENT AGENCY. IN 1978, CONGRESS PASSED A
LAW TO CREATE THE THREE-MEMBER BOARD THAT
GOVERNS NCUA TODAY. THE NATIONAL CREDIT UNION
SHARE INSURANCE FUND WAS ALSO FORMED OCTOBER 19,1970
TO INSURE CREDIT UNION DEPOSITS. IN THE INDEPENDENT CREDIT
UNION SPIRIT, THE SHARE INSURANCE FUND WAS CREATED
WITHOUT TAX DOLLARS AND CAPITALIZED SOLELY BY CREDIT
UNIONS. TODAY, THE SHARE INSURANCE
FUND PROTECTS INDIVIDUAL ACCOUNTS UP TO $250,000 AT
ALL FEDERAL CREDIT UNIONS AND THE OVERWHELMING
MAJORITY OF STATE-CHARTERED
CREDIT UNIONS. NO MEMBER HAS EVER LOST A
PENNY OF INSURED DEPOSITS AT A FEDERALLY INSURED CREDIT
UNION. ON JANUARY 20, 1971,
PRESIDENT RICHARD M. NIXON SIGNED AN EXECUTIVE ORDER
ESTABLISHING THE NCUA SEAL. THE SEAL HAS FOUR UNIQUE
DESIGN ELEMENTS THAT DEMONSTRATE NCUA’S
COMMITMENT TO PROTECTING THE MILLIONS OF AMERICANS WHO
DEPEND ON CREDIT UNIONS AND ENSURING THE SAFETY AND
SOUNDNESS OF THE COOPERATIVE CREDIT SYSTEM. THE FIRST ELEMENT IS THE
ROOF, WHICH SYMBOLIZES COOPERATIVE PROTECTION SHARED
BY THE COMMON-BOND MEMBERS. THE SECOND ELEMENT IS THE
DOOR, WHICH SYMBOLIZES THE OPPORTUNITY AND PROTECTION
OF MEMBERS’ SHARES THROUGH THE SHARE INSURANCE FUND. THE THIRD ELEMENT IS THE
BLUE BACKGROUND DIVIDED INTO FOUR SECTIONS. THIS SYMBOLIZES THE MAJOR
ADVANTAGES OF CREDIT UNION MEMBERSHIP: CULTIVATION OF
THRIFT, ENCOURAGEMENT TO SAVE REGULARLY, GRANTING OF
LOANS FOR PROVIDENT PURPOSES AT A REASONABLE INTEREST
RATE, AND BUDGET AND CONSUMER COUNSELING. THE FINAL ELEMENT IS THE
AGENCY’S NAME SURROUNDING THE SEAL. THIS SYMBOLIZES THE AGENCY’S
COMMITMENT TO PROTECTING THE COOPERATIVE CREDIT SYSTEM
AND ITS MEMBERSHIP. THE 90’S BROUGHT A STRONG
ECONOMIC CLIMATE CAUSING FEDERALLY INSURED CREDIT
UNION MEMBERSHIP TO FLOURISH. IN 1998 PRESIDENT BILL CLINTON
SIGNED LEGISLATION RESTORING EXPANSION PRIVILEGES AND
PROVIDING FOR MULTIPLE COMMON BOND CREDIT UNIONS. WHICH ALLOWED CREDIT UNIONS TO
INCREASE FIELD OF MEMBERSHIP AND
MERGERS. IN THE YEARS SINCE THE
PASSAGE OF THE FEDERAL CREDIT UNION ACT, CREDIT
UNIONS HAVE WORKED TO OFFER LOANS AND PROVIDE NEEDED
FINANCIAL SERVICES TO HARDWORKING AMERICANS. TODAY, FEDERALLY INSURED
CREDIT UNIONS HAVE MORE THAN $1 TRILLION IN ASSETS AND
NEARLY 100 MILLION MEMBERS. NCUA AND ITS MORE THAN 1,000
EMPLOYEES CONTINUE TO WORK TO PROTECT AND ENHANCE A
CREDIT UNION SYSTEM THAT IS SAFE, SOUND, AND SECURE

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