The first black credit unions were established in the 1920s and 30s in the same vein as the credit union movement as a whole; the goal was to help poor farmers and urban groups move toward economic self-sufficiency. As the civil rights movement gained momentum in America, the founding of black credit unions followed the rising tide of tolerance. Martin Luther King Jr. and the Montgomery Improvement Association actually applied for a federal charter for a credit union in 1950, but were turned down because the association was too broad a field of membership.
The Johnson administration (1963-1969) and the Great Society initiative organized hundreds of credit unions to serve low-income groups, often in black neighborhoods. The push for more credit unions came from the Federal Office of Economic Opportunity and was targeted at local anti-poverty organizations, known as Community Action Agencies. Unfortunately, by 1970 many of these institutions failed due to a lack of resources, technical support, and unrealistic business plans.
To protect their interests in the future, low income credit unions organized to form the National Federation of Community Development Credit Unions in 1974. The NFCDCU advocates for community development credit unions (CDCU) and provides financial, technical, and human resources to help credit unions reach the members who are most in need. CDCUs became increasingly helpful as the economic conditions of the 1970s caused larger banks to cut costs by only serving their best customers. Many banks in low-income areas closed down and there was an increase in red lining, or the refusal to lend in low-income, usually minority neighborhoods.
Help came through the passing of the Federal Home Mortgage Loan Disclosure Act in 1975 and the Community Reinvestment Act two years later in 1977. The acts required financial institutions to keep records of loan decisions and to invest back into the areas where they receive capital in the form of deposits. Although credit unions are exempt from the CRA because Congress did not consider them to be part of the problem The National Federation of Community Development Credit Unions has creatively used CRA to obtain bank assistance as well as government and non-profit aid.
The NFCDCU is still in operation today. It should be noted that although many low income credit unions serve a largely minority membership, not all black credit unions are considered low-income or community development institutions. Today, the African-American Credit Union Coalition organizes the credit union movement’s strongest black leaders.
Formed in 1999, the AACUC is a non-profit organization that offers members the opportunity to influence and shape the credit union movement and its government affairs. The AACUC promotes the personal and professional growth of its members as well as provides a unified voice to improve economic development of communities that are often under-served by major financial institutions.
Happy Black History month from creditunions.com.
Below is an excerpt from Martin Luther King Jr.’s I Have a Dream Speech:
In a sense we’ve come to our nation’s capital to cash a check. When the architects of our republic wrote the magnificent words of the Constitution and theDeclaration of Independence,they were signing a promissory note to which every American was to fall heir. This note was a promise that all men, yes, black men as well as white men, would be guaranteed the unalienable Rights of Life, Liberty and the pursuit of Happiness. It is obvious today that America has defaulted on this promissory note, insofar as her citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked insufficient funds.
But we refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. And so, we’ve come to cash this check, a check that will give us upon demand the riches of freedom and the security of justice.