IRC

Presidents Say 'Yes' to Credit Unions

U. S. Presidents have supported the cause of credit unions since Edward A. Filene introduced them into the United States in 1908. During a visit to India, Filene was much impressed by the system of cooperative credit societies he found there, particularly in the rural areas. Local farmers pooled their resources to assist each other in obtaining needed tools, equipment and livestock. The societies encouraged saving and made low cost loans to members.

On his return to the United States, Filene wrote to President Theodore Roosevelt describing the cooperative credit societies and suggesting they might have potential as a banking system for the Philippines. Roosevelt's secretary replied that the suggestion would have the president's "due consideration."

Filene forged ahead with the credit union idea and studied Raiffeisen societies in Germany and the Desjardins' Caisse Populaire at Levis, Quebec. With the assistance of Alphonse Desjardins, Massachusetts Bank Commissioner Pierre Jay, Felix Vorenberg, and members of the Massachusetts legislature, Filene was able to get the state credit union law passed in 1909. Future president Calvin Coolidge was a member of the state senate banking committee who worked for the law's successful acceptance.

Theodore Roosevelt was keenly interested in the problems of rural credit and the plight of farmers who were so dependent on a good harvest for their livelihood. To learn more about the systems of rural credit, he created the Country Life Commission in 1908. Dean Liberty Hyde Bailey of Cornell University's School of Agriculture chaired the Commission. The Commission's report concluded that there was no adequate system of agricultural credit in the United States, and that cooperative credit would certainly "prove a great service."

Roosevelt then appointed a National Commission whose members were to study the existing banking system and to make recommendations for change. David Lubin, American delegate to the International Institute of Agriculture at Rome, felt certain that the Raiffeisen societies and the cooperative banking ideas of Hermann Schulze-Delitzsch could be of major benefit in the United States. He wrote to Roosevelt about his findings. The leaders of the Southern Commercial Congress met in Nashville in 1912, and invited David Lubin to speak.

When William H. Taft became president in 1912, he took up the cause of rural credit in the United States by first urging American diplomats in Europe to study methods of agricultural credit in European countries. Myron T. Herrick, American ambassador to France, reported to the president on the operation of Raiffeisen societies and on the Schulze-Delitzsch system in Germany. Taft sent copies of the report to every state governor. In the accompanying letter, he described the Massachusetts Credit Union Act as a "good law" and pointed out that the organization of credit unions in that state was "wonderfully simple."

On December 7, 1912, Taft called a White House Governors Conference at which he urged the governors to support credit union legislation in their own states. On his last day in office, the president signed a bill to establish a commission to investigate rural credit in Europe and make recommendations for a similar system in the United States.

Woodrow Wilson, who took office the next day, appointed a commission of seven with Senator Duncan Fletcher of Florida as chairman. The group went to Europe to study rural credit systems in-depth. While this did not result in immediate legislation in the United States, the way was being laid for the Federal Credit Union Act.

In 1921, Filene set up the Credit Union National Extension Bureau to "get the laws" and to supervise the organization of credit unions. He hired Roy Bergengren as executive secretary of the Bureau. For the next 13 years, Bergengren and his field staff traveled the country supporting the enactment of state credit union legislation and helping to organize credit unions.

In 1932, Herbert Hoover signed the District of Columbia Credit Union Act, which operated under federal law. Bergengren felt it was time to win support in Congress for a Federal Credit Union Act.

The first version of the act, sponsored by Senator Morris Sheppard of Texas, never made it to the Senate floor. In 1934, Senator Sheppard submitted it again. On June 5, President Franklin Roosevelt sent a memorandum to the Secretary of the Treasury stating, "I really believe in the usefulness of credit unions. Would you please take it up with the Congressional Committees concerned and see if we can get it passed without opposition in the closing days?"

Bergengren and Earl Rentfro of Missouri spent most of June lobbying for the act which was finally passed on June 24. Roosevelt signed the act on June 26, 1934. Now credit unions could be organized in any state.

Since 1934, other presidents have shown their support for credit unions by signing legislation favorable to the credit union cause.

On July 31, 1946, Harry S. Truman signed amendments to the Federal Credit Union Act, which transferred regulation of credit unions from the Farm Credit Administration to the Federal Security Agency. In 1950, Truman also laid the cornerstone of Filene House in Madison, Wisconsin, the headquarters of the international credit union movement.

The Federal Credit Union Act underwent significant revision in 1959. Dwight D. Eisenhower signed the revision. In 1963, John F. Kennedy signed further amendments to the Federal Credit Union Act on Credit Union Day.

Credit unions joined President Lyndon Johnson's "War on Poverty" in the 1960s. Under the Economic Opportunity Act, credit unions for low-income groups were organized. Johnson also signed the Omnibus Bill, which permitted credit union loan officers to approve loans without consulting credit committees.

Congressman Wright Patman of Texas drew up legislation supporting an independent regulatory agency for credit unions in 1969. Richard M. Nixon signed the bill in 1970 creating the National Credit Union Administration.

President Gerald Ford supported a central liquidity facility for credit unions and signed the Housing and Community Development Act of 1974, which included amendments to the Federal Credit Union Act.

In 1980, Jimmy Carter signed the Depository Institution's Deregulation and Monetary Control Act, which enabled credit unions to compete with commercial banks and savings and loan associations on an equal basis.

When the Supreme Court denied the right of credit unions to add new groups to their fields-of-membership in 1997, credit unionists went to Congress to obtain legislation allowing them to add members from other groups. The Campaign for Consumer Choice and intense lobbying finally resulted in passage of HR 1151 - The Credit Union Membership Access Act. President Bill Clinton signed the act on August 7, 1998.

For nearly a century, presidents have been saying 'yes' to credit unions.

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