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Credit Union

CREDIT UNION


Credit unions were not-for-profit financial institutions formed by people who, joined by a common interest, pooled their savings and made loans to each other at below market rates. There were three fundamental differences between credit unions and savings and loan associations. First, credit union members usually worked at the same company, lived in the same community, or belonged to some other common organization, like a church. The second difference was that the money that credit unions loaned was generally used for prudent, short-term consumer loans, such as medical procedures, car purchases, emergencies, or home improvements. Finally because credit unions were based on the notion that their members shared community ties, they took a more flexible, personal approach to evaluating the creditworthiness of those they loaned to.

The first credit unions appeared in Germany in the middle of the nineteenth century, but it wasn't until 1909 that the first credit union was established in the United States. In that year a credit union opened in Manchester, New Hampshire, and Boston businessman Edward Filene successfully convinced his state legislature to legalize credit unions in Massachusetts. In 1921 Filene founded the Credit Bureau National Extension Bureau (CBNEB) to promote credit union expansion nationwide.

The CBNEB was replaced in 1934 by the Credit Union National Association, and 41 of the 48 U.S. states made it legal to operate credit unions. In the same year the Federal Credit Union Act made it possible for credit unions to be established anywhere in the United States, and by 1969 there were almost 24,000 credit unions nationwide.

In 1970 two federal agencies helped to further legitimized the credit union industry. The National Credit Union Share Insurance Act extended federal deposit insurance coverage to include credit union assets. The National Credit Union Administration was also established to regulate the credit union industry. Following federal moves to strengthen public trust in credit unions, the number of U.S. credit unions dwindled as smaller unions consolidated to offer more services. Nevertheless, the number of individual credit union members increased. By 1999 credit union membership in the United States had climbed to more than 72 million.

See also: Savings and Loan Association

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"Credit Union." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. 21 Aug. 2017 <http://www.encyclopedia.com>.

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"Credit Union." Gale Encyclopedia of U.S. Economic History. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/credit-union

credit union

credit union, cooperative, not-for-profit financial institution that makes low-interest personal loans to its members. It is usually composed of persons from the same occupational group or the same local community or institution. Funds for lending come from the sale of shares to members and from the members' savings deposits. Cooperative banking originated in Germany in the middle of the 19th cent.; it was developed by Hermann Schulze-Delitzsch and later was particularly adapted to rural communities by F. W. Raiffeisen. In the United States, the Credit Union National Association (founded 1934) has been instrumental in organizing credit unions. Credit unions are important because they provide loans to blue-collar workers and small farmers, who would otherwise have difficulty securing credit at reasonable interest rates. Under provisions of the Credit Union Act of 1934, U.S. credit unions are chartered by their respective states or by the federal government.

See R. F. Bergengren, Credit Union, North America (1940); J. Dublin, Credit Unions: Theory and Practice (2d ed. 1971); J. C. Moody and G. C. Fite, The Credit Union Movement (1971).

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"credit union." The Columbia Encyclopedia, 6th ed.. . Encyclopedia.com. 21 Aug. 2017 <http://www.encyclopedia.com>.

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"credit union." The Columbia Encyclopedia, 6th ed.. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/reference/encyclopedias-almanacs-transcripts-and-maps/credit-union

Credit Union

CREDIT UNION

A corporation formed under special statutory provisions to further thrift among its members while providing credit for them at more favorable rates of interest than those offered by other lending institutions. A credit union is a cooperative association that utilizes funds deposited by a small group of people who are its sole borrowers andbeneficiaries. It is ordinarily subject to regulation by state banking boards or commissions. When formed pursuant to the Federal Credit Union Act (12 U.S.C.A. § 1751 et seq. [1934]), credit unions are chartered and regulated by thenational credit union administration.

A credit union can be distinguished from other financial institutions by the fact that membership is ordinarily restricted to individuals who meet certain residential or occupational criteria. In addition, it can make loans of a more diversified nature than certain institutions, such as building and loan associations.

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"Credit Union." West's Encyclopedia of American Law. . Encyclopedia.com. 21 Aug. 2017 <http://www.encyclopedia.com>.

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"Credit Union." West's Encyclopedia of American Law. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/credit-union

credit union

cred·it un·ion • n. a nonprofit-making money cooperative whose members can borrow from pooled deposits at low interest rates.

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"credit union." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 21 Aug. 2017 <http://www.encyclopedia.com>.

"credit union." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/credit-union

"credit union." The Oxford Pocket Dictionary of Current English. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/credit-union