The Solution To A Catch 22

During the Great Depression, Boeing employees couldn’t afford the tools they needed to remain employed, so they formed a credit union.

 
 

BECU ($12.6B, Seattle, WA) was founded in 1935 as the solution to a catch 22. Boeing employees were expected to buy the tools they needed to do their jobs. In the middle of the Great Depression, however, employees couldn’t afford the tools, and without the work, there was no money to pay for anything.

A group of coworkers came to the rescue and formed the Fellowship Credit Union. By pooling their funds, those coworkers raised enough capital to provide loans to their peers that could then be used to purchase the tools. Of 18 founders, each contributed 50 cents so that the assets totaled $9. The first loan limit was $2.50. By the end of 1936, the credit union had a Washington state charter and had grown to 490 members. After changing its name to Boeing Employees’ Credit Union in 1949, the cooperative continued growing so that by 1953 total assets had reached $1 million. Two years later, just 20 years after it was founded, BECU had 20,500 members and assets totaled $5 billion.

As it happened, the Great Depression wouldn’t be the only time BECU helped members cope with economic hardship. During the recession in the 1970s, the credit union expanded membership, first to retired Boeing employees and then to the family members of all employees, so that more people could benefit from the credit union’s competitive loan rates at a time of high inflation.

More recently, BECU helped ease the pain of the Great Recession by returning profits to members and continuing to lend even as mortgage requirements grew more stringent. As a result of this commitment to mortgage lending, the credit union was officially appointed a Federal Housing Administration lender and certified by the Fair Mortgage Collaborative. Plus, when most financial institutions were cutting costs, BECU invested in new technology to emerge from the recession with a brand new suite of cutting-edge services. The new technology included mobile banking, online deposits, person-to-person payment service, speech recognition telephone banking, and Snapshot ATMs that accept check or cash deposits without an envelope.

In less than a century, the credit union that began with 18 people now boasts more than 250,000 members and $12 billion in assets, making it one of the largest cooperatives in Washington state and the nation overall — proof that good things can come from a catch 22.

This week, in honor of July 4, we invited five credit unions to share the story of their beginnings. Tune in each day to learn about another cooperative’s origins.