THE WORLD WAR I AND DEPRESSION YEARS
By the end of World War I, credit unions had sprung up across America—particularly those affiliated with larger employers such as railroads and post offices. These individuals realized the need to band together to accomplish their organizational and legislative goals. In 1922, Edward Filene established the first credit union association—the Credit Union National Extension Bureau— appointing lawyer Roy F. Bergengren as its head.
The Virginia General Assembly passed the state's credit union law on the last day of its 1922 session. This is due to the hard work and dedication of national leaders like Roy Bergengren and state leaders like C.H. Morrissett, the state's tax commissioner; R.H. Carrington, a prominent Richmond attorney; E.G. Swem, a librarian for the College of William and Mary and Mr. Boushall, president of the Morris Plan Bank. The law also reflected the first major achievement of the Credit Union National Extension Bureau. The CUNEB had been established late in 1921 and would become the Credit Union National Association, the largest national credit union trade association.
Once leaders felt the movement had grown sufficiently to warrant a state league the Virginia Credit Union League was organized at a mass meeting of credit unions on Nov. 26, 1934 in Richmond. With 67 representatives from 16 of Virginia's 40 credit unions in attendance, Roy Bergengren, now leader of the newly-formed Credit Union National Association, urged the leaders of the Virginia movement to press forward with the efforts to organize credit unions in the state. Organization was slow going under the state process, but the passage of the Federal Credit Union Act in 1934, led to the formation of no less than 53 new credit unions through the first quarter of 1937.
THE WORLD WAR II AND POST-WAR YEARS
As credit unions were organized, the needs were recognized and filled. CUNA Mutual Insurance Society was formed in 1935 for the protection of credit unions and their members. One year later, CUNA Supply Cooperative was established to provided forms and other materials. In 1939, Virginia League Central Credit union was formed so that credit union directors and employees (who at that time were barred from joining their own credit unions) could enjoy credit union membership. By 1949, the responsibilities of the League had grown such that the organization hired its first full-time managing director, Garland Keeling. CUMIS, the Credit Union Mutual Insurance Society, was established in 1960.
A TIME OF GROWTH
In 1964, the League’s Lynchburg headquarters was formally dedicated. The League formed Virginia Credit Union Services in 1969 to provide contract services to member credit unions. In 1976, Virginia League Corporate Federal Credit Union (VACORP Federal Credit Union) — the credit union for credit unions — was chartered. It was during the time that the League first became politically involved, establishing its political action committee (VACUPAC) in 1977 and holding its first Congressional Breakfast in 1978.
By the end of the 1970s, credit unions were pressing for the right to provide their members with checking accounts—known in credit union circles as “share drafts.”
CHANGES AND CHASM
The early 1980s brought about the changes which would define the growing chasm between commercial banks and credit unions. When federally-chartered credit unions were authorized to provide share drafts to their members in 1980, banks saw the loss of the monopoly which they had enjoyed on consumers’ checkbooks. Knowing that consumers were likely to conduct even more business at the financial institution holding their checking accounts, bankers feared erosion of their market share to credit unions.
This fear was increased in 1982 when credit unions’ federal regulator, the National Credit Union Administration (NCUA), authorized the addition of “select employee groups” into existing credit unions. No longer was credit union membership limited only to the fortunate minority who worked for businesses large enough to form and sustain their own credit unions; now membership was potentially available to more than half of Americans who worked in businesses employing 500 or fewer people. The early 1980s also brought about the advent of the first ATM in Virginia and the Tri-State Credit Union Cooperative, formed to enable area credit unions to pursue and master the new technology.
Banks watched hopelessly as their primary perceived benefit—the convenience of a branch on every corner—was challenged by new technology, which would enable the consumer to have access to funds and account information. And the small fries—the credit unions—were fast gaining that technology. Even worse, they were uniting in their attempts to master it.
CIRCLE THE WAGONS
By 1984, CUNA and the Leagues were celebrating their first half-century of service to credit unions. Their veteran capabilities were put to the test in 1985 when the U.S. House of Representatives began to consider a proposal to tax credit unions.
The League conducted seminars around the state, educating credit union supporters about the consequences of the proposed tax plan. Rallied to action, members and staff flooded Congress with letters, telegrams, phone calls, and personal visits. Known as the VOTES Campaign (Victory on Tax Exempt Status), the effort included a Capitol Hill rally on Sept. 12. Victory was achieved on Dec. 3 when the House Ways and Means Committee reported out its tax reform bill—minus any provisions for the taxing of credit unions. The credit union movement’s tax exemption had survived its toughest challenge to date. By 1987, however, the same issue had reared its head again.
Once again, credit unions protected their own. But by 1989, in the wake of the $164 billion bailout for the savings and loan industry, credit unions’ tax exemption had once again come under legislative scrutiny—this time coupled with threats to the maintenance of credit unions’ independent regulator and insurance system.
Working together, CUNA and the Leagues launched “Operation Grassroots”—a two-year campaign to battle the barrage of misinformation which banker groups had provided to the lawmakers and the media. By the close of the decade, the issues at the federal level, although still unresolved, seemed somewhat within control. However, matters in Richmond were unresolved: the old state laws were inadequate for the changing needs of state-chartered credit unions. The League successfully lobbied the General Assembly for a study of the Virginia Credit Union Act for “recodification.”
SPOTLIGHT ON THE STATE
House Bill 1095 was known around Richmond as the most important piece of credit union legislation in Virginia since the first state law was passed in 1922. Introduced by Del. C. Hardaway Marks of Hopewell, it clarified the State Corporation Commission’s regulatory authority and specifically codified the powers of state-chartered credit unions. Thanks to a flood of phone calls, letters, and visits from credit union supporters around the state, the bill passed without a dissenting vote and was signed into law by Gov. L. Douglas Wilder.
WORKING TOGETHER TO MANAGE MULTIPLE ISSUES (1990s)
The last decade of the twentieth century got underway with continued banker attacks, growing bankruptcy concerns, and increased needs for cooperation and credit union “name brand” awareness. In 1991, the Operation Grassroots Rally on the Capital Mall in Washington D.C. drew more than 15,000 credit union supporters from across the country. Together, they lobbied for the retention of the independent National Credit Union Administration (NCUA) as regulator and the exclusion of credit unions from reform measures intended to correct the S&L crisis.
The 1,000-member Virginia delegation at this event produced petitions containing more than 140,000 signatures from members of Virginia’s credit unions. Credit unions’ cooperative spirit emerged again in 1992 as the League spearheaded the formation of the “Credit Union Service Company of Virginia”—which would be responsible for the formation and management of shared branches. Within a year, its first two facilities—one in Newport News and another in Chesapeake—would be operational.
The League’s political involvement continued in Richmond with a successful battle against an automobile dealers’ plan to abolish off-site sales. Recognizing the need to build legislative relationships and maintain a visible presence, the League organized the first “Credit Union Day at the General Assembly” in 1993.
Any notion of a future of “business as usual” ended with the National Credit Union Administration's (NCUA) “Truth-In-Savings” regulations which required all credit unions to automate their posting systems. To assist smaller credit unions in complying with these regulations, the League held training programs across the state.
Concerned about the possibility of smaller credit unions becoming lost in the technological shuffle, the League established a system to facilitate assistance from larger credit unions. By 1995, the League Board of Directors had approved a program to provide assistance to small credit unions for the purchase of mission-critical computer software. The third service center opened that same year in Virginia Beach, and the General Assembly passed legislation permitting credit unions to participate in the shared facilities without filing applications or paying fees.
In July 1996, Judge Thomas Jackson ruled in the D.C. Circuit Court that federally-chartered credit unions must confine their membership to the original group around which they had been chartered. His ruling meant that federally-chartered credit unions could not accept any new “select business groups” into their fields-of-membership, overturning an NCUA policy which had been in effect for more than a decade.
Federally-chartered credit unions were also barred from offering services to potential members from groups accepted since 1982. Consumers were effectively locked out of federally-chartered credit unions, and credit unions were barred from future growth. Later that fall, Virginia banking commissioner Sid Bailey would impose a similar restriction on state-chartered credit unions, making Virginia one of just two states in the nation where all credit unions were prohibited from accepting small business groups into their membership. By Christmas Eve 1996, the U.S. Circuit Court of Appeals had issued a partial stay, permitting credit unions to once again serve potential members of the groups they had already been added to their field-of-membership. But new groups were still prohibited—and war with the bankers was on.
GRASSROOTS AT ITS FINEST
By 1997, the national “Credit Union Campaign for Consumer Choice” was pressing ahead to combat bankers’ claims that credit unions had exceeded the limits contained in the 1934 Federal Credit Union Act. The “Campaign” was also charged with the mission of promoting the advantages to consumers of credit union membership. In February 1998, the U.S. Supreme Court ruled that current federal law did not provide for the multiple common bond fields-of-membership in federally-chartered credit unions. In April 1998, the three-judge State Corporation Commission had made a similar ruling regarding state-chartered credit unions. Across the country, credit union supporters realized that their very survival was at stake. In Virginia, the League organized chapter “Crusade Committees” to make legislative contacts, raise funds, and write letters. By the end of 1998, they had generated more than 20,000 pieces of mail to lawmakers and editors.
Nationally, credit unions would score their first victory over the bankers on April 1, 1998, when the U.S. House of Representatives passed H.R. 1151 in a 411-to-8 vote. By July, the fight for Senate passage was in full swing, with an estimated 7,000 credit union supporters from across the nation gathering in Washington, D.C. on July 14. Two weeks later, the U.S. Senate would pass H.R. 1151 by a 92-to-6 margin. A week later, President Bill Clinton signed the legislation into law, ending a bitter two-year struggle to preserve consumers’ access to not-for-profit, member-owned credit unions.
The battle shifted to the state level immediately following the passage and enactment of H.R. 1151. Consumer Crusade Committees organized visits to state legislators, laying the groundwork for parity legislation for the Commonwealth’s state-chartered credit unions. State banking commissioner Edward “Joe” Face Jr. would draft parity legislation in the fall of 1998, which would later win the support of the League.
Thanks in part to strong grassroots support and the efforts of credit union member-owners, volunteers, and staff statewide, parity legislation won the nearly-unanimous support of state legislators during the 1999 General Assembly session, and was signed into law by Gov. Jim Gilmore on March 9, 1999.
2000 AND BEYOND
As the new century kicked off, the League led a project to ensure 100 percent Internet readiness among Virginia's credit unions. This “All Aboard Online!” strategy aimed to make Virginia the first state to achieve this important technological milestone.
Working in partnership with the Texas League, the System Services Division developed a “24/7” lending center for Virginia’s credit unions, providing increased member convenience and strengthened lending programs.
In conjunction with International Credit Union Day festivities, Virginia's credit unions officially celebrated the donation of their one-millionth dollar to the Make-A-Wish Foundation, Virginia credit unions' charity of choice for 10 years.
2001: TERROR STRIKES HOME
The terrorist attacks of September 11 dominated the news of 2001. A handful of credit unions in Virginia and D.C. lost members in the attacks and dozens of others watched as their members went off to war. The Virginia system rallied to aid those in need, raising more than $700,000 for various September 11th related causes.
The terrorist attacks further hurt an already soured economy impacting credit unions’ bottom lines and culminating in year-end rate cuts by the Federal Reserve, which cut rates a total of eight times during the year. Credit unions were forced to look for new and innovative ways to deal with a lingering recession, the first in almost a decade.
FIGHTING FOR OUR FUTURE - CREDIT UNIONS' SECOND CENTURY
In the courts, bankers again challenged credit unions’ fields-of-membership in a lawsuit that sought to curb the National Credit Union Administration's (NCUA) SEG-approval powers and weaken the stunning victory of H.R.1151. Fortunately, the courts would eventually side with credit unions. Credit unions also spent much of 2001 fighting for legislation that would curb bankruptcy abuse. With a proverbial nine lives, the legislation was saved each time it seemed in danger of being permanently derailed, but stalled once it reached a House/Senate conference committee.
Credit unions looked to take their futures into their own hands as CUNA’s Renaissance Commission completed the monumental task of creating a “blueprint” for credit unions’ continued success. Covering such issues as regulation, operations, the dual-chartering system, and legislation, the Commission’s recommendations won the support of CUNA’s board and served as a road map for CUNA’s and the Leagues' efforts on various fronts, including legislation.
State-chartered credit unions fought for, and eventually won, reserve requirement parity with their federally-chartered peers. The Virginia Bureau of Financial Institutions also approved its first multi-county community charter expansion.
2000 also ushered in tremendous changes for smaller credit unions, with many choosing to merge with a larger credit union counterpart to offer members the wide array of services today's consumer expects. Through 2005, the state lost almost 50 credit unions.
2001 brought tremendous political change on the state level with no less than 22 new members of the House of Delegates taking office, prompting credit unions to work especially hard on campaigns and to educate these new lawmakers about the "Credit Union Difference."
Passage of the USA PATRIOT Act led to a series of education and information sessions sponsored by the League to bring credit unions up to speed on compliance issues related to the Bank Secrecy Act and OFAC. Regulatory compliance is requiring credit unions to devote more resources than ever before, with the League stepping up its own efforts to aid credit unions.
In May 2002, the League, in partnership with credit unions around the state, launched its most extensive cooperative advertising campaign ever, which positively impacted consumers' impression of credit unions statewide.
Banker attacks on field-of-membership issues and taxation reached a new level in 2003, with the various banking trade groups working closer than ever to bring about the demise of the credit union movement. To counter this effort, credit unions nationwide mobilized for bitter battles at both the state and federal levels. In Virginia, the League launched its Credit Union Defense Fund, seeking to raise funds for what seemed a likely attack at the state level on the issue of taxation. Owed to credit unions' ongoing lobbying and grassroots efforts, state bankers choose not to pursue a credit union taxation bill. Banker-led attacks have continued, however, with a host of new lawsuits and lobbying efforts designed to constrain credit union growth and either force or encourage the conversion of larger credit unions to a mutual savings bank charter. Perhaps the most significant of these efforts resulted in a rule change from the National Credit Union Administration in 2006 that bars all but multiple-common-bond credit unions from adding so-called underserved areas to their fields-of-membership. By allowing credit unions to serve underserved areas, NCUA sought to encourage affordable financial services for those in areas long abandoned by banks.
The League also cemented its commitment to financial literacy with the formation of a standing committee and the hiring of a financial literacy specialist in 2002.
2005 brought exciting new initiatives including the beginning of a rebranding campaign for the League; the Credit Union Service Company of Virginia's expansion into South Carolina, providing South Carolina's credit unions with our expertise in shared branching; and nurtured the formation of the Credit Union Marketing Council of Virginia, a network of marketing professionals throughout the Commonwealth dedicated to delivering top-notch networking and education opportunities. During 2005, we also saw the end of an almost decade-long fight to reform the nation's bankruptcy laws, with President George Bush signing reform legislation into law in April 2005.
ONE VISION. ONE VOICE.
The financial crisis and recession of 2008-2009 brought incredible change to the credit union landscape. While the credit union system weathered the recession better than other financial institutions, the costs associated with the stabilization fund for the corporate credit union system and an ever-increasing regulatory burden posed significant challenges.
The League refocused its mission, deploying its resources to better address credit unions' needs in three key areas: Advocacy, Compliance and Education/Profession Development.
In partnership with the Credit Union National Association and our fellow Leagues, we continue to fight for lessening credit unions' regulatory burden, protection of credit unions' tax exemption and enhancements for the credit union charter. We also continue to provide needed expertise to credit union on the laws and regulations governing their operations.