Evening star., 1954-12-26

aside as d reserve for bad loans.
Dividends are limited to s per
cent a year. with 3 rate Of ; or
& per cent common.
Membership is limited to
members Of q group with !
common interest such as em-
ployes of an industry. members
of a labor union, or neighbors IA
q community group.
OfIicers Of 3 Federal Credit
Union cannot borrow more than
they have deposited, and all Of
ficers or employees who handle
money are required to be bonded.
Although Federal Credit Union
funds are not insured, they must
be deposited promptly in q bank
where such deposits are insured
by the Federal Deposit Insurance
Corp.
The meteoric growth Of credit
unions In recent years has been
Of concern to bankers. When
they were small, bankers for the
most part welcomed them. They
relieved the banks Of the nui-
sance of small loans.
But at a recent meeting OF
savings bank executives. j. H.
Cheslow, president of the Ma
tional Association of Mutual
Savings Banks, told the execu-
tives:
"As you all know. these began
as group associations of people
with common interests who
pooled their savings in order to
lend to their members at low
rates. Recently. they have be-
come more ambitious and now
some of them are reported to
admit anybody who wishes to
join either as saver or borrower" /"
Criticism Lacking.
j. Deane Cannon, director OF
the Bureau of Federal Credit I'm
ions. said he has received almost
no criticism Of credit unions from
bankers.
The American Bankers Asso-
citation, however, has undertaken
a study of credit union opera
tions. with a view toward recon-
restrictions on their ac-
tivities. The bankers feel that
credit unicnS, In some cases, are
attempting to take over more
bank functions.
In the light of the ABA sur
vey, one point of concern among
credit union generally is a pend
ing suit in United States District
Court for the District of Column
bia, involving three big Federal
Credit Unions here.
The unions, at State, Interior
and Labor have about 10000
members and assets of around
$2.5 million.
4 Charters Suspended.
The Bureau of Federal Credit
Unions suspended the charters
of the State and Interior credit
unions for charging 10-cent
fee for cashing checks.
The Bureau feels that we
cannot engage in the business of
cashing a check for a fee," Mr..
Cannon said.
The State and Interior credit
unions filed suit to force the
Bureau to restore the charters.
The Labor Department union
Joined them. although their
charter is not involved. Tie suit
is scheduled for hearing in
January.
Bureau officials emphasize that
the growth of credit unions is
not the doing of the Bureau. It
is prohibited by law from pro-
noting credit unions, and all
approaches must be made by
persons interested in setting up
a union. @
Associations Cited.
Interest in credit unions is.
however, promoted by independ- :
ent associations of credit unions.
The national organization of
such associations is Credit Union
National Associations. In the
District, it is the District Of
Columbia Credit Union League.
Not all credit unions belong
to such associations. The three
unions involved in the suit, for
example, are not members. The
League and the Association also
are concerned about the effect
the court suit may have on the
reputation of credit unions and
the ABA survey.
About q year ago, the Federal
Reserve Banks made a study OF
credit unions, and concluded
that their growth was In proper
ton to the help they gave their
members.
las long as credit unions help
people" the report said, 'they
will continue to be important"
Despite the concern of bankers
about credit unions, their saw
ings represent only about one
half Of l per cent of the total
long-term savings by individuals
Loans also are small in proper
ton to those made by other lend
ing institutions.