As a TruMark Financial member, you know credit unions are always striving to better serve their members and community. This article is the first in a series celebrating the history, contributions, and benefits of credit unions.
Both credit unions and banks provide consumers with financial services and products, but there are many distinctions between the two. The primary credit union difference lies at its core: banks are created to generate profit for owners, while credit unions are not-for-profit and provide members with a place to manage their finances at the best possible terms.
The first credit union was established in 1864 by Friedrich Raiffeisen in southern Germany. Raiffeisen proposed that all community members pool resources so individuals in need of loans could easily access the necessary funds. Raiffeisen’s idea was well-received, and the first credit union model was soon established.
In 1909, the credit union movement reached American shores. With Edward Filene serving as its pioneer, the movement gained momentum and continued to grow. In 1920, Edward hired attorney Roy F. Bergengren to assist him in generating the movement’s expansion. Roy created a more systemized concept for the credit union we know today.
In 1934, President Franklin D. Roosevelt signed the Federal Credit Union Act into law.
Federally chartered credit unions in every state were legally authorized to create a system of not-for-profit cooperatives to promote thrift and sound financial practices.
In 1970, the public’s confidence in the credit union model grew stronger as the National Credit Union Share Insurance Fund was established. With it, credit union deposits became federally insured much like the FDIC insures bank deposits.
The credit union movement was growing at its most rapid pace, with credit union assets in America tripling between 1970 and 1979. Then, in 1977, another credit union-friendly regulation was signed into law, empowering credit unions to offer more services and products to members.
Today, the credit union movement continues to thrive and is backed by the “full faith and credit of the United States Government.” These not-for-profit institutions serve their 103 million+ members by always putting members’ needs first.
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