History of the Credit Union Movement

Credit unions, as a whole, enjoyed economic stability as the nation suffered through the Great Depression. Because they were required by their bylaws to keep reserve funds sufficient to meet the demands of 1930s consumers and businesses, most credit unions were able to weather the Depression unscathed. Some emerged even stronger.

In 1930, a credit information exchange was created to enable associational, parish and open-membership credit unions to record all borrowers' and co-makers' names. The exchange, which opened with over 25,000 records, helped credit unions minimize delinquent accounts and eliminate bad accounts. That year, the nationwide credit union movement reached an important milestone when the 1,000th credit union was formed.

1931 marked the end of "open" credit unions--popular organizations that offered membership to "any person" or "any adult of good moral character." At the recommendation of the Banking Department, the credit union law was amended to limit new credit unions to groups with strong common bonds or residential communities with populations of fewer than 10,000.

The New York State Credit Union League continued to grow through the 1930s. Five League chapters were organized in Brooklyn, Buffalo, Capital City, New York City and Rochester to promote closer cooperation, idea exchange and membership growth.

The League and its members continued to find ways to help credit union members. With the realization that many members were applying for loans to pay medical bills, Frank Rubel, the League's general counsel, and William Reid, president of Municipal Credit Union, approached New York City Mayor Fiorello LaGuardia to find a better solution. Together, the group devised and established the Health Insurance Plan of Greater New York.

In 1934, Congress passed the Federal Credit Union Act allowing credit unions to be established anywhere in the country. Under the Act, credit unions could choose whether to be state or federally chartered—a crucial step, as many states did not have a state credit union law at the time.

The credit union movement's national expansion necessitated the formation of a national organization. State leagues united in Colorado to form the Credit Union National Association (CUNA), replacing the Credit Union National Extension Bureau. This new association was led by Roy Bergengren, an attorney Filene had hired in 1921 to head the Bureau.

One of CUNA's first priorities was to provide insurance for credit unions and their members: In 1935, CUNA established CUNA Mutual Insurance Society to replace Aetna. CUNA Mutual quickly developed insurance policies to protect members' loans and life savings.

The League affiliated with CUNA in 1936; this move made national resources accessible to the credit unions of New York State. At the time, the League had 170 member credit unions with 55,000 members and assets totaling $8,000,000.

In that same year, Governor Herbert Lehman became the "First Credit Union Governor in the United States" when he joined the New York State Employees Credit Union.