Evening star., 1954-12-26
Swift Growth Of Credit Unions
Gives Bankers Competition
By Jack Jonos

NV 49, 9&abbNSs ~
By Jack Jonos
This is another banner year
for credit unions groups viewed
with increasing alarm BY bank
ers who consider them more and
more as competitors.
The Bureau of Federal Credit
Unions has granted 806 charters
to such groups through NoVem-
Der. With December incomplete.
Bureau officials said the number
Of Federally-supervised credit
unions chartered will top last
years 835. in itself the largest
total since the first two years Of
the programs operation--1935
and 1896.
It is estimated that another
$50 are being licensed or char
tered by A States which have
credit union laws.
Neayly z million people belong
to the Nations 14.50O credit
unions, and have deposited saw
ings approximating SIT billion.
Example Is offered.
Evidence that credit unions
have become big business" can
be found in Washington. At the
Pentagon. for example, the
credit union has more than 49,
900 members and assets Of
nearly $4 million.
The 148 credit unions in the
District of them associa-
tions of Government workers
have nearly 10000 members.
Like most governmental opera
tions in the District. the super
vision of credit unions here is
unique.
The District also has a credit
union law. There are 16 unions
licensed under that law, and they
also are mostly in Government
departments. The two biggest
are those at the Police Depart
ment and for District employees.
Licensed by District.
The District also has licensed
credit unions in Federal depart
ments, the largest of those being
at Agriculture, Commerce and
the Post Office. Only two Of the
16 are outside of Government
departments.
The Bureau of Federal Credit
Unions. a division Of the Health,
Education and Welfare Depart
ment, charters the other 1872.
Unlike the operation in the
States. however. the Bureau
makes all examinations and re-
ports on credit unions in the
District.
In the States. the State char
tered unions are under State
supervision, and the Federally-
chartered under the Federal
Government. Actual control of
each, however, rests with the
members.
The Federal Government was
put into the credit union busi-
ness by Congress in 1884 in a
move designed to promote thrift
and offer a source for small
loans during the bitter depres-
sion years.
Originated i'm January.
The credit union idea is be-
lieved to have originated in Ger
many In 1848, and the first Of
fcially recognized were in Mas
sachusetts. where a State law for
chartering credit unions was
passed in 1909 at the insistence
Of Edward Filene of Boston.
Operation Of State and Fed
eral credit unions Is similar.
Members make savings by buy
ing shares. with each share
valued at IS. Deposits of as
small as Is cents can be made.
AS in a bank. the money can be
withdrawn at any time. Credit
unions encourage their members
to make regular savings Of small
amounts.
The Federal credit unions are
authorized to make unsecured
loans UP to $4O0 and secured
loans for larger amounts. de-
pending on the state of its assets.
Each union has authority to set
smaller limits on its unsecured
loans.
Scheduled Repayments.
RepaymentS of the loans are
made on a definite schedule, and
no loan can run for longer than
three years. A credit committee,
elected by the members, passes
on all loan applications.
Interest cannot exceed per
cent a month, on unpaid bal
ances. If any service charges are
made, they must fall within the
per cent interest.
At annual meetings each jan
uary, members of the credit
union elect a board of directors.
q supervisory committee and q
credit committee. The board
then elects officers from its own
members.
Net earnings above 90 per cent
may be returned to members as
dividends. The 20 per cent is set
/ - 80