ORNL FCU 75 Years
While experts from the Oak Ridge National Laboratory were unraveling the causes of Three Mile Island, ORNL Employees Federal Credit Union began its thirty-first year grappling with inflation and skyrocketing interest rates that had been dogging the American economy throughout most of the 1970s. This unsettled economic environment threatened “the very foundation of our movement,” the board noted in its 1979 annual report, adding that “survival, in an uncertain economy, has become our number one priority.” Until that point, credit unions had enjoyed a competitive advantage in that they were allowed to pay a higher rate on savings than banks and other financial institutions. But during 1979, the financial industry began to feel the effects of congressional action in 1978 that essentially deregulated the amount of interest financial institutions could pay on savings: all financial institutions could pay the same rate of interest on larger savings accounts. These new savings accounts, known as money market certificates, offered high interest rates over a short six-month term. Many members were understandably attracted to these investments and began moving their savings to other institutions. When it became evident that economic and world situations would result in the continuation of high interest rates on savings and loans, the credit union moved to prevent additional withdrawals by offering these certificates. But this made the cost of making loans ( selling money) higher than the interest paid on member savings ( buying money). For the first time in its history, ORNL EFCU was compelled to restrict loans for purposes other than those deemed essential. As the board also noted in its 1979 annual report, “growth is not an objective in itself, but desirable if it benefits our members and does not detract from the quality of our service.” While it was experiencing the least financial growth in one year that could be recalled by many, the credit union maintained and even improved its stability as a financial institution. In addition to money market certificates, it increased its offerings via IRA accounts, money management seminars, and—in this International Year of the Child—directed much of its efforts toward services and educational programs for younger members. The persistent high rate of inflation, rising interest rates, and substantial outflow of savings made 1979 the most disruptive year ORNL FCU had faced. But much of this impact was alleviated in 1980 when President Jimmy Carter signed into law the Deregulation and Monetary Control Act giving credit unions the right to offer checkable deposits and removing interest rate ceilings. The credit union’s members directly advocated for the successful passing of this legislation by sending more than one thousand cards, letters, and telegrams to local and federal legislators. With the improved balance now between savings and loan rates, the credit union was able to turn its attention to improving services and providing new services. Money market and jumbo certificates were rolled out, along with monthly interest on money market certificates and a trial run of Visa and Mastercard programs. Member ID cards were introduced, and a new slogan— your kind of place —made its debut as well. To better align with its growing membership beyond exclusively laboratory employees, the credit union ended that year publicly unveiling its new name, ORNL Federal Credit Union.
36 | 75 YEARS ORNL FEDERAL CREDIT UNION
Made with FlippingBook - professional solution for displaying marketing and sales documents online