Back in 1909, Massachusetts had the honor of passing the first credit union law. A hearing before the State Senate Committee on Banks on February 19, 1909 featured testimony from Alphonse Desjardins, the father of Canadian credit unions; Edward A. Filene, who helped to form the Credit Union National Extension bureau; and Boston-based businessmen Felix Vorenberg, whom Filene appointed to a leadership position within the credit union movement. Their testimony sealed the deal for credit union legislation.
On April 15, 1909, the Massachusetts Credit Union Act became law. It served as the model for similar acts passed in other states, as well as for the Federal Credit Union Act passed in June 1934. Plans were underway to establish Southbridge Credit Union when President Franklin D. Roosevelt signed, in 1934, the Federal Credit Union Act.
U.S. credit unions are celebrating their centennial year in the midst of gloomy economic times. Many Americans are hurting, and folks are apprehensive about their economic prospects.
Credit unions wish this weren't the case, and they are stepping in to help whenever possible. But the current situation is an important reminder that credit unions themselves were founded from adversity such as this. It is also a reminder of their proud history of putting people before profits in order to provide access to affordable financial services to all their members.
The cooperative business concept, along with an emphasis on public service through a commitment to conservative style of banking has allowed credit unions to be a haven for the last 100 years during times of crisis.
And even in the midst of the current market crisis, credit unions have been repeatedly heralded as an important source of stability in the financial sector. Indeed, credit unions remain committed to helping our citizens retrieve the economic power lost during the current crisis and to recover their homes lost because of the mortgage market upheaval.
Not only is this the reason that credit unions exist, it is also what they do best. And it is this proud, 100-year tradition of being part of the solution rather than the problem that credit unions are celebrating today.
Just as in other difficult economic times, credit unions stand poised to be part of the solution to the economic crisis confronting the nation. Based on subprime mortgage lending, the U.S. economy suffered a rash of bank failures and near failures which required the U.S. Congress to pass a $700 billion bailout package.
Globally, bank bailouts became a daily occurrence. The nonprofit, democratic, and cooperative principles underlying credit unions are capable of providing sound economic assistance to members. Sen. Joseph Lieberman, D-Conn, a long-time supporter of credit unions, stated in a letter to Daniel Mica, CEO of the Credit Union National Association (CUNA), "Credit unions have been among the few lenders in the financial industry demonstrating the resiliency and strength to continue lending." Given the failure of banks to act responsibly, it is no wonder that Daniel Mica would suggest, "If everyone acted like credit unions, we wouldn't have this crisis."
For more information on the 100 year history of credit unions, visit www.cuna.org/100years.
Jeffrey Davenport is the CEO of Southbridge Credit Union. He can be reached at email@example.com.