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Credit unions Filene’s key legacy

By Claes Bell · Bankrate.com
Wednesday, November 2, 2011
Posted: 4 pm ET

Word this week that Filene's Basement, the popular Massachusetts-based discount store and one of the last remnants of the department store empire of Edward Filene, will be closing its doors in 2012. The store was famous for its literally bargain-basement prices and door-busting sales of wedding gowns.

Why am I writing about a discount clothing store on a banking blog?

Well, I think it's appropriate, at a time when one of the last companies that bears Edward Filene's name is closing down, to recognize Filene for an achievement that's far more important: founding the credit union movement in the United States.

Yes, in addition to being a self-made millionaire, retail genius and a founder of the U.S. Chamber of Commerce, Filene is considered the father of the American credit union.

Every American that's ever received a low-cost mortgage or a higher-than-average savings yield from a credit union owes a debt of gratitude to Filene, who first encountered credit unions in a 1907 trip to India. Fascinated by the idea, he helped push for the passage of the first state credit union act in 1909.

By 1921, he had established a credit union for his own employees and founded the Credit Union National Extension Bureau with a $1 million donation to help credit unions expand through the United States. The Federal Credit Union Act became federal law in 1934, facilitating the spread of credit unions throughout the U.S.

Why did Filene do all this? From the Credit Union National Association website:

"Filene had a deep social conscience and was disturbed by the extreme poverty and social dislocation surrounding him in the early 1900s. Having seen credit unions at work in Europe and India, he believed that they would allow the masses to have a stake in, even significant control over, the distribution of money. He had little use for charity, but deep faith in the capacity of people to improve themselves as long as they had good information and the discipline to use it effectively."

So if you're a credit union members or a bank customer who'st glad there's an alternative to big banks when a new wave of fees rolls through, join me in toasting the memory of Edward Filene, one of the greatest entrepreneurs and philanthropists in American history.

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