Marking 85 Years of Credit Union Excellence

On June 26, 1934, President Franklin D. Roosevelt signed the Federal Credit Union Act into law. With a stroke of his pen, Roosevelt set the stage for the rapid expansion of an innovative type of financial institution that would democratize banking and credit, helping to spur the growth of the middle class during the post-war era.

That’s a story worth celebrating.

Thanks to the Act and the robust regulatory framework it engendered, millions of Americans—including teachers, police officers, firefighters, parishioners, skilled tradespeople, military personnel, and their families—would be empowered to pool their resources and organize credit unions.

Eighty-five years later, federally insured credit unions are stronger than ever, offering a variety of affordable financial services to help tens of millions of members buy homes, pay for educations, start or expand small businesses, and build greater financial security for themselves and their families. Today, more than 117 million Americans entrust their savings and their financial well-being to their credit unions.

The rise of the credit union movement is a story of expanding economic opportunity that began in response to a great need, and in a time of great national trial.

A century ago, many Americans had trouble getting access to capital. If you were from a working-class background, if you had a small business you hoped to see grow, or if you had a family farm where you needed to get your crops or livestock to market, access to credit was tough to come by. Even if you could get that capital, it often came with high interest rates or the loan was structured in a way that made repayment problematic or even impossible. The 1929 stock market crash and subsequent depression only exacerbated these problems.

Difficult times demanded creative thinking; necessity gave birth to invention, in this case, the Federal Credit Union Act.

But the most important story to tell here is not about legislation or institutions. It is a story about people helping people in their own communities.

Credit unions came from a grassroots movement, not out of government fiat.  This movement was grounded in people’s desire to solve problems, like how to extend access to credit to Americans in hard-to-reach places, in underserved communities, in rural areas, people who were overlooked or passed by.

“A national system of cooperative credit,” offered through non-profit, locally based, member-owned financial institutions that could provide affordable services. It was about people pooling their resources to invest in one another and in their communities.

It was not a completely new idea; credit unions existed prior to the federal law, chartered by states. But the Act laid the groundwork for the comprehensive system we have now.

That framework led to increased trust, confidence, and accountability, which allowed these local institutions to expand and thrive.

The National Credit Union Administration’s mission is to regulate and supervise the credit union system and protect members’ accounts. Every day, our people are responsible for ensuring that credit unions are living up to the values embedded in the industry’s original conception.

Looking to the industry’s future needs, we should expect opportunities and tremendous challenges as credit unions adapt to technological and market changes. Industry leaders and regulators alike will need to be prepared to respond to those opportunities, challenges and changes with integrity, foresight and prudence.

Working together, we can meet those challenges and embrace those opportunities. Our goal is to ensure the safety and soundness of credit unions, so they can continue to fulfill the objectives laid out 85 years ago.

Credit unions are carrying on their long tradition of serving working people and underserved communities, just as the drafters of the law and President Roosevelt envisioned. I believe they would be proud of the progress the industry has made and in the direction it’s heading.