What is a Credit Union?
A credit union is a cooperative, not-for-profit financial institution organized to promote thrift and provide credit to members. It is member-owned and controlled through a board of directors elected by the membership. The board serves on a volunteer basis and usually hires a paid management team to run the credit union. The Board establishes and revises policy, sets dividend and loan rates, and establishes strategic direction for the organization. The result: members are provided with a safe, convenient place to save and borrow at reasonable rates at an institution which exists to benefit them, not to make a profit. It is overseen by the National Credit Union Administration (NCUA), a Federal Agency which monitors compliance, monitors financial soundness, and provides the same $250,000 insurance protection for a member’s savings as its sister agency, FDIC, does for commercial banks.
Credit unions were created when people banded together to form financial coop arrangements so they could help each other out of tough economic times. Today, credit unions still exist to help and support their members. The International Credit Union mantra of “People helping people” has prevailed to this day.
From the beginning, credit unions have gained traction amid times of extreme upheaval and economic depression. Credit unions started around 1850 in Germany. The movement then moved to Italy, then the rest of Europe, then England, Canada, and finally America.
This time was marked by devastatingly painful change in Europe. The Industrial Revolution was in full swing, but the people were still mostly peasants tied to the agrarian life structure of a feudal system. Banks were mostly for the rich with few options left for others other than to be preyed upon by “loan sharks”.
It was a pivotal time in history but, as is often the case, social evolution created significant turmoil. This resulted in tremendous suffering throughout Europe. e.g.
- In Ireland, there was the great Potato famine of 1846 which led to a mass immigration to other countries, especially America.
- In Germany: crop failures as well as a severe winter led to famine, plague, and suffering.
Since support structures were slow to evolve, there was no organized relief, and charity organizations were inadequate. People discovered that they had no one to depend on but themselves so they banded together to help each other. These early experiences led to the formation of “Credit Societies” organized on the principals of the Cooperative system. But whether you call it a COOP, a society, or a Union, the principles are the same:
- It is owned and controlled by its members,
- Services and benefits to members are based on individual wishes as well as relationship to the coop rather than just the profit,
- Cost is normally less because no revenue goes to stockholders, therefore dividends on deposits can be higher and loan prices can be lower, and
- Credit unions exist to serve their members and can often be more innovative in providing financial services.
Even the names that were used to describe them from the earliest days are telling:
- Cooperative Credit,
- Credit Societies,
- People’s Banks, and finally
- Credit Unions.
It is no surprise that the National Credit Union Act, signed by FDR in 1934, in the midst of the Great American Depression, was put forth as a “FIX” for the dark events of this period.
Today Credit Unions are serving people on a worldwide scale. Our mantra “People Helping People” is as alive today as it was over 150 years ago. We call our industry a “credit union movement” and can get quite sappy about our principals and mission.
A credit union is a “not for profit” organization that, is not only a banking service, but also gets very involved in philanthropic and community endeavours.
You may have noticed us wearing Black and Pink Tee Shirts in October to recognize Breast Cancer research month. And on Oct 15 we joined in on the worldwide celebration of International Credit Union Day. Guess what the theme is? PEOPLE HELPING PEOPLE!
Also, unlike competing businesses in other industries, credit unions also help other credit unions. Could you imagine Bank of America, Wells Fargo, Chase and Bank of the West executive helping each other out on a daily basis? Not likely. It is a totally different mindset and experience that goes back to volunteer member Boards and business segmentation.
SWSFCU was founded 70 years ago at the end of World War II by men and families associated with the Martinez Shell Oil Refinery. They had come back from war and were trying to restart their lives. They banded together as groups had been doing since the mid-1800s and the SWS Federal Credit Union was born. Today it has nearly 4000 members and is open to anyone who lives, works, worships or attends school in Contra Costa County.
We have made a lot of changes in the last few years, but after 70 years we are still a member owned financial institution that exists to help our members achieve their individual financial goals in a safe and sound environment. Our organization values behaviour that is ethical, cohesive, caring, dependable, professional, and progressive. We believe that
- All people (regardless of financial status) are individuals – not numbers,
- All people should be treated with dignity and respect,
- All products & services should respond to our members’ individual needs, and
- Are committed to operating in a safe, sound and ethical manner to protect our members’ funds.
Finally, we offer great rates on products and services which include:
- Loans for mortgages, vehicle, School, Christmas and other personal reasons or VISA credit cards.
- Savings products including money market accounts, Holiday accounts, IRAs and certificate of deposits.
- Community activities such as financial literacy training, Foodbank, Boys’ & Girls’ Club, the California Credit Union League and the Chamber of Commerce.