President Roosevelt Signs Federal Credit Union Act Into Law (1934)
On June 26, 1934, President Franklin D. Roosevelt signed the Federal Credit Union Act into law to create federal credit unions in the United States.
Roosevelt passed the Federal Credit Union Act in an effort to make credit available to more individuals after the Great Depression through a national system of nonprofit credit unions. The Act created the federal credit union system and the Bureau of Federal Credit Unions, the predecessor to the National Credit Union Administration, to regulate federal credit unions.
In short, a credit union is an institution owned by the members (or customers). Membership is generally limited to individuals based on a common bond. For example, the credit union may limit membership to a particular job industry, geographical community, university, religion, etc.
Members pool their savings together into a large amount of money, much like banks do with their customers. Then, the members vote on a board of directors to make decisions on how members can acquire and offer loans, create incentives, and offer other financial programs. So, in many respects, a credit union acts much like a bank – but generally with members instead of customers.
As of 2008, there were over 4,800 federal credit unions with over $448 billion in assets serving more than 49 million people. Also, the Federal Credit Union Act allows a credit union to gain its charter under either federal or state law.