Credit Union Times - Centennial Edition - (Page I6) CeLeBrAtiNg 100 YeArS , SPeCiAL CeNteNNiAL editioN Credit Union regulation Slow to Start and Has Been Focus of Shifting rules and roles By clauDe r. MarX CU Times Washington Reporter WASHINGTON — It took 25 years and a total policy shakeup to get the federal government interested in regulating credit unions. The first credit union was chartered in 1909, but Congress didn’t get around to creating a system for overseeing them until 1934. That’s when, as part of the New Deal, lawmakers passed the Federal Credit Union Act. It was sponsored by two Democrats from Texas, Sen. Morris Sheppard and U.S. Rep. Wright Patman. The measure said the purpose of credit unions was to “make available to people of small means credit for provident purposes, through a national system of cooperative credit, thereby helping to stabi- Sen. Morris Sheppard of lize the credit structure of Texas was one of the sponsors of the Federal the United States.” During a floor speech, Credit Union Act. The Sheppard said the country’s first federal credit union was named for him. 2,200 state-chartered credit unions had been successful in meeting their goals of providing access to credit during difficult times and that creating a national system “would greatly stimulate a form of cooperative banking, which has met every test of the Depression successfully.” The bill, which was signed into law by President Roosevelt, created the dual chartering system that exists today and allowed states to tax credit unions at the same rate as other financial institutions. It also gave the Farmers Home Administration the power to regulate credit unions. In 1935, the IRS ruled that federal credit unions were tax exempt. The following year, Congress passed a law giving state-charted credit unions the same exemption and exempting federal credit unions from state and local taxes not based on the value of their property. The government removed the tax-exempt status of mutual savings banks–but not credit unions–in 1951. In 1969, certain activities of state-charted credit unions began being subject to the unrelated business income tax when Congress expanded the application of the tax to certain nonprofit organizations. Between 1934 and 1969 the regulation of credit unions moved around to various federal agencies, including the FDIC and the Department of Health, Education and Welfare. In 1970, Congress created the National Credit Union Administration, which was financed by the credit unions. The agency then created the National Credit Union Share Insurance Fund. The NCUA was run by an administrator until 1979, when Congress created a three-member board, only one of whom could have experience in the credit union field. That year, Congress also created the Central Liquidity Facility, which provides loans to credit unions having financial difficulties. In 1985, the share insurance fund required all federally insured credit unions to place 1% of their assets in the fund and since then the fund has only had to charge a premium once, in 1991, when the U.S. was the midst of a recession. The next major year in American credit union history was 1998. President Franklin D. Roosevelt is shown here signing the Federal Credit Union Act in 1934. That February, the U.S. Supreme Court ruled that the 1934 law creating credit unions requires there to be a “common bond” among members, thus limiting the ability of credit unions to expand their membership. Six months later, as a result of a concentrated lobbying effort by the credit union movement, Congress passed the Credit Union Membership Access Act (H.R. 1151), which gave credit unions broad authority to expand their membership. The bill, which was strongly opposed by community banks, limited the new community charters for credit unions to well-defined local communities. It gave NCUA the power to define what such a community is and what constitutes an “immediate family member” for purposes of membership eligibility. —cmarx@cutimes.com A granddaughter remembers: Bergengren Belonged to Movement ‘But He Was Mine’ By JiM ruBenstein CU Times Senior Correspondent BERLIN, Vt. — It has been nearly 55 years since the death of one of the revered icons in credit union history, Roy Bergengren, but his granddaughter, Kathleen Pelletier, still carries his memory close. Now a Vermont high school counselor, Pelletier said she finds talking about him “something so much fun because there are so many happy memories of a person I call my hero.” Bergengren may have been “a towering figure of great character, a statesman filled with boundless energy, intensity and spirit bent on building a ‘crusade’ for credit unions, but as far as I was concerned he simply belonged to me, my grandpa–a gentle man who spent treasured time with me and who loved me in an extraordinary way,” said Pelletier, who only recently learned where some of the family’s long-lost heirlooms are now housed. Pelletier still resides in the same brick Cape Cod house on Paine Turnpike in Berlin where Bergengren, the New England lawyer who in 1934 was a major force in chartering what is now CUNA in 1934, lived with his wife, Gladys. Pelletier’s grandmother died in 1986. Several years ago, Pelletier was asked to speak of her family ties at CU conferences that included the World Council of Credit Unions and a 2004 Connecticut gathering where she told of the man “who I loved so much and was my best friend for the first 12 years of my life,” a man whose name is mentioned along with Filene, Desjardins, Herring and Raiffeisen as pivotal figures in credit union history. She said she told the world council meeting in Nashville of her grandfather’s reputation for being emotional and strong willed and his sometimes tempestuous relationship with Edward Filene during the organization of the Massachusetts Credit Union Association, which Bergengren managed for a time until it ran out of money. And then there was the 1934 Estes Park, Colo., conference in which there is an ironic twist regarding the long journey of one of the Pelletier artifacts, a grainy group photo of the conclave to create the organization now known as CUNA. “I have to admit I was a little sheepish and never told anyone in Connecticut about that photo,” said Pelletier who in a special ceremony was given a framed copy of the very same picture which she remembers adorned a wall in her grandparents’ bedroom. As it turned out, after Bergengren died, her grandmother gave away “a lot of his stuff including that photo which went to CUNA for the museum in Madison,” said Pelletier. “I think it was her way to heal” though today she regrets that some was not kept in the family. Among the other heirlooms was a famed typewriter which her grandfather used to write documents for the CUNA chartering. The typewriter, which Bergengren ended up carrying for blocks across the Boston Commons, became a symbol of CU austerity and frugality among CUNA founders. “You mean to tell me that typewriter is not in Madison any longer?” she asked when learning the typeYoung writer, one of the objects given by Kathleen Pelletier her grandmother to the museum, was the is now at America’s Credit Union apple of Museum in Manchester, N.H. her grandPelletier, who is married to a father’s street foreman and has three eye. daughters and four sons, said the Estes Park photo has always represented a kind of living history to her as she learned more about her grandfather’s pivotal role in the founding of CUs. She added, “The mystery to me is where is the original print? I hope to find out eventually.” In her Connecticut speech given some grow three years ago, Pelletier recalls her growing up years with Bergengren as the “grandpa with a Boston terrier by his side who wore an old black pea coat with a mint in his pocket” and who enjoyed spending hours reading to his granddaughter. “He taught me to love books by coming to my house faithfully every night to read with me,” she recalls “When we ran out of books, he made up magical stories. He made a swing in the apple tree and built the best sand castles ever. He was and continues to be my role model.” —jrubenstein@cutimes.com www.cutimes.com Credit Union Times, December 2008 http://www.cutimes.com
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