HISTORY OF CREDIT UNIONS The credit union idea is a simple one: People should be able to pool their money and make loans to each other. It's an idea that evolved from cooperative activities in 19th century Europe.   Since that time, the idea's guiding principles have remained the same:(1) Only people who are credit union members should borrow there; (2) loans are made for 'prudent and productive' purposes; (3) a person's desire to repay (character) is considered more important than the ability (income) to repay. Members are, after all, borrowing their own money and that of their friends. These principles still govern most of the world's credit unions.   As the 20th century began, the credit union idea surfaced in Canada. Canada's successful efforts profoundly influenced two Americans: Pierre Jay, the Massachusetts banking commissioner, and Edward A. Filene, a Boston merchant.   The two men helped organize public hearings on credit union legislation in Massachusetts, leading to passage of the first state credit union act in 1909.   SAFETY & SOUNDNESS Credit unions primarily engage in consumer loans and residential real estate lending to their members. Credit union performance is at a historically high level. Currently, credit union capital nationwide is 10.28% and the equity ratio of the federal insurance fund, the National Credit Union Share Insurance Fund (NCUSIF), has operated above 1.25% for 11 consecutive years.   REGULATION & SUPERVISION The Methuen Municipal Employees' Federal Credit Union was chartered under feral law. Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA), an independent agency of the U.S. Government. NCUA's three board members are nominated by the President and confirmed by the Senate.   State chartered credit unions are regulated by their state credit union department. NCUA administers the federal insurance fund, NCUSIF, which covers all federal credit unions, and most state chartered credit unions. No taxpayer money is used for regulating and overseeing federal credit unions, as all activities of NCUA and the NCUSIF are funded by credit unions.