With over a trillion dollars in assets and more than 100 million members, it is clear that credit unions must play a pivotal part of any effective strategy aimed at bringing the co-op model to full scale in the American economy. At first glance, one would assume that their obvious role would be as the financial backbone of the co-op movement, providing financial services and loans to existing co-ops, while offering incubation and start-up capital to new ones.
While such a vision of credit unions being “one spoke in the great wheel of co-operation” was very much present for early credit union leaders like Roy Bergengren, it ceased to be a focus after he was pushed out of CUNA in the mid-1940s. At that point, the conservative faction of “business credit unionists,” who saw credit unionism as more of a human resources function than a social movement, rose to power, and the credit unions’ connections to the rest of the cooperative movement were largely severed for decades.
In more recent times, there has been a rapprochement between the credit union sector and the rest of the co-op movement, but that strengthening of ties has not translated into strong credit union support for cooperative development. Unlike the 1940s, the present cause has been more regulatory than ideological. As credit unions have grown in scale through consolidation, the banking lobby has worked hard to limit credit unions’ penetration into their profitable business lending turf. As a result, credit unions may legally lend out no more than 12.25% of their assets to member businesses, and face copious other requirements that often make lending to other co-ops challenging.
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