CU History Continued... Page 2
In 1970, the National Credit Union Administration (NCUA) became an independent federal agency. Congress also created the National Credit Union Share Insurance Fund (NCUSIF) to protect deposits at credit unions.
The 1970s also brought major changes in the products offered by financial institutions. Credit unions, too, found they needed to expand their services. In 1977, federal legislation allowed U.S. credit unions to offer new services to their members, including share certificates and mortgages. U.S. credit unions grew tremendously during the 1970s. The number of credit union members more than doubled during the decade, and credit union assets tripled to more than $65 billion.
Deregulation, increased flexibility in merger and field of membership criteria, and expanded member services characterized changes in the 1980s for U.S. credit unions. Early in the decade, high interest rates and unemployment brought supervisory changes and insurance losses, as well.
With the NCUSIF experiencing financial stress, the credit union community called on Congress to approve a recapitalization plan. In 1985, federally insured credit unions recapitalized the NCUSIF—a federal fund backed by the full faith and credit of the U.S. Government—by depositing 1 percent of their shares.
Throughout the 1990s and into the start of the 21st century, U.S. credit unions continued to expand as a group. Because few credit unions failed, the NCUSIF also prospered. Then the nation’s credit union industry faced profound and unprecedented threats to its stability in 2008 and 2009. A steep drop in global financial markets triggered the most severe economic downturn since the Great Depression.
The resulting cascade of job losses, bankruptcies, and home foreclosures exerted pressure on the entire American financial services sector— including credit unions. From the onset of the crisis, NCUA took decisive action and worked in concert with Congress, the U.S. Department of the Treasury, the Federal Reserve and other authorities to safeguard the U.S. credit union system.
Many of the largest corporate credit unions in the United States invested in troubled mortgage-backed securities that experienced dramatic, unprecedented declines in value, effectively rendering five of these institutions insolvent. The loss to the U.S. credit union system was sizable. The NCUA acted
Encouraged by this success, Filene organized and Bergengren managed a national association — the Credit Union National Extension Bureau—to promote the establishment of credit unions hroughout the United States. By 1925, 26 states had enacted laws to charter credit unions. By 1930, 32 states had adopted credit union laws with a total 1,100 credit unions.
In 1934, President Franklin Delano Roosevelt signed the Federal Credit Union Act into law, creating a
In 1934, President Franklin Delano Roosevelt signed the Federal Credit Union Act into law, creating a national system to charter and to supervise federal credit unions. The credit union movement grew steadily in the 1940s and 1950s. By 1960, credit union membership amounted to more than 6 million individuals belonging to more than 10,000 federal credit unions.