Dual chartering
Encyclopedia
Dual chartering refers to the system by which credit unions in the United States can be chartered under either of two governmental authorities; by either the federal government or by the state government. This system exists because of the Federal Credit Union Act
, which Congress passed in 1934.
Federal Credit Union Act
The Federal Credit Union Act is an Act of Congress enacted in 1934. The purpose of the law was to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions...
, which Congress passed in 1934.
- Federally chartered credit unions (those with “Federal Credit Union” in their names) are chartered under the authority of the National Credit Union Administration. Federal credit unions insure their members share accounts through the National Credit Union Share Insurance FundNational Credit Union Share Insurance FundThe National Credit Union Share Insurance Fund is administered by the National Credit Union Administration for the purpose of providing deposit insurance to protect deposits of credit union members at insured institutions in the United States. It was created in 1970 shortly after the creation of...
(NCUSIF), which guarantees the safety and soundness of the credit union.
- State chartered credit unions may exist in states that allow for the chartering of financial institutions under the authority of the state. Unlike Federally chartered credit unions, state chartered credit unions in some states may choose to insure their assets through either the NCUSIF, or through private insurers such as American Share InsuranceAmerican Share InsuranceAmerican Share Insurance is a privately held deposit guaranty corporation that insures shares in some state chartered credit unions. ASI was established in 1974 as the National Guaranty Insurance Fund, changing its name to American Share Insurance in the early 1990s...
(ASI).