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Word Count: 500
The Development Of Credit Unions A credit union is a member owned member controlled not-for-profit cooperative financial institution Credit unions were formed to provide loans to its members at lower rates of interest than would be other wise available The first credit union was formed by a group of farmers in Belgium 1848 during a period of severe economic depression Townspeople pulled their money together to provide loans to each other This cooperative approach helped farmers avoid paying the high rates being charged by loan sharks These loans enabled a farmer to buy the necessities to plant a crop or to help members buy coal in bulk at lower prices At the time of their origins the only financial assistance available was the local moneylenders At the time of the depression people who took out loans were forced to pay expensive interest rates Credit Unions serve low-income people A persons ability income to repay is considered more important than the desire to sustain the assets of the credit union Members are borrowing their own money and that of their peers By 1900 the first financial cooperative idea had spread from Germany to Canada Canadas successful efforts influenced two Americans Pierre Jay the Massachusetts bank commissioner and Edward A Filene a Boston merchant These two men helped organized public hearings on the credit union legislative in Massachusetts This led the establishment of the first Credit Union Act in the United States in 1909 The growth of credit unions across the US was slow Fewer than 10 states passed credit union laws 1934 Congress passed the Federal Credit Union Act This act set the basic structure which governs credit unions today examples Member control is democratically exercised regardless of the number of shares held Loans which are primary investment for credit union are made exclusively to members A board of directors supervises management By 1935 38 states and the District of Columbia had
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