ESTABLISHMENT & PURPOSE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81-00314R000600120001-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: November 16, 2016
• Document Release Date: December 27, 1999
• Sequence Number: 1
• Content Type: PAPER

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ESTABLISHMENT & PURPOSE
A memorandum to the Executive Director from the Executive
25X1A for Administration and Management, Subject:
Credit Union, dated 1 August 1947, is one of the first records
on file concerning the need of a credit union for CIG civilian
employees.
The purpose was to promote thrift among members by afford-
ing them an opportunity for accumulating their savings and to
create for them a source of credit for loans for provident or
prudent purposes.
Memorandum dated 11 August 1947 to the Director from
the Executive for Inspection and Security, Colonel Sheffield
Edwards, concurred with the idea of setting up such a credit
union, provided the Board of Directors of the Credit Union be
required to carry out security provisions for its operations
as established by the Executive for Inspection and Security.
The Director of Central Intelligence approved the proposed
project on 14 August 1947.
Memorandum dated 12 September 1947, signed by
25X1A
25X1A
was circulated to all employees requesting an expression
of interest in such a credit union. The group required at
least one hundred (100) members willing to work together with
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.tz
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25X1A
25X1A
a genuine desire to be of assistance to their fellow members.
Within the month, a total of employees 25X1A
had expressed an interest in joining such a credit union.
A petition to organize the CIA Federal Credit Union
was presented to the Federal Deposit Insurance Corporation(1)
on 4 November 1947. The petitioning subscribers requested
permission to organize in accordance with provisions of Public
Act #467 of the 73rd Congress, entitled "An Act to establish
a Federal Credit Union System, to establish a further market
for securities of the United States and to make more available
to people of small means credit for provident purposes through
a national system of cooperative credit, thereby helping to
stabilize the credit structure of the United States."
There were ten original subscribers, each of whom subscribed
for one share.
and Edward R. Saunders (then Comptroller of the Central Intelli-
gence Group and first Credit Union President).
The Organization Certificate dated 4 November 1947 was
approved by FDIC on 19 November 1947, pursuant to provisions
(1)On 19 July 1948, the powers, duties and functions of Federal
Deposit Insurance Corporationeredit union activities,
were transferred to the Federal Security Agency (a predecessor
Agency of Health, Education & 1Welfare). On 10 March 1970, by
App
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was eabis
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of Section 4 and Section 16 (c) of the Federal Credit Union
Act. Letter was received from FDIC dated 19 November 1947
wishing success to the new Credit Union.
The name of the Credit Union was to be the CIA Federal
Credit Union.
An amendment was approved 14 March 1955 chargLng name
to Northwest Federal Credit Union.
FEDERAL SUPERVISION
The FDIC was to be responsible for carrying out the pro-
visions of the Federal Credit Union Act and supervising the
activities of the Credit Union. The books and records of
the Credit Union would be examined each year by an FDIC
examiner.
LOCATION
The Credit Union was to maintain its offices in Washington,
D.C., to operate in Washington and adjoining counties of
Maryland and Virginia. This was changed by amendment approved
22 October 1962 requesting that office of operations be changed
from Washington, D.C., to McLean, Virginia.
The first office of the Credit Union was located in
Room 203, Central Building.
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The Main Branch of the Credit Union is now located in
Headquarters Building. This office is open from 1000 to 1500
hours daily and from 1000 to 1600 hours on bi-weekly paydays.
The Credit Union also operates a branch office at the Ames
Building which is open from 1130 to 1330 hours daily and from
1000 to 1400 hours on bi-weekly paydays. Another branch office
25X1A is located at and is open on Thursdays only
from 1000 to 1200 hours and on payday Thursday from 1000 to
25X1A 1300 hours. There is a which is operated
on paydays from 1300 to 1500 hours.
MEMBERSHIP
1. Active - The field of membership was limited to
civilian employees of the Central Intelligence Agency in
Washington, D. C., and adjoining counties in Maryland and Virginia;
employees of the Credit Union, members of their immediate families,
and organizations of such persons. An amendment was approved
7 July 1950 extending field of membership to include other
places where Central Intelligence Agency employees may be located
and was further amended on 18 May 1956 to include military per-
sonnel of Department of Defense assigned to CIA.
An applicant could be admitted to membership by exe-
cuting an Application for Membership Card and paying an entrance
fee of 25 together with a payment of 25c toward the purchase
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Resolution No. 70-3 approved by the Board of Directors
on 29 April 1970 abolished the $0.25 entrance fee.
2. Retired - on 8 July 1970, the Board of Directors
adopted Resolution 70-6 permitting retired employees to con-
tinue their membership in the Credit Union subject to certain
limitations. Retired members must maintain a minimum share
balance of $100.00 and they are permitted to borrow from the
Credit Union only to the extent that the loan request is
fully secured by shares on deposit.
MANAGEMENT
The Credit Union was to be managed by the following:
1. A Board of Directors, consisting of five members,
to be responsible for the general direction and
control of the affairs of the Credit Union, using
the Federal Credit Union Act and the By-Laws as
guidelines. The By-Laws were revised in April 1969
giving the Board greater scope in directing the
affairs of the Credit Union. The Board may now
change general policies of the Credit Union by resolu-
tion rather than having to refer to NCUA for approval.
2. Credit Committee, consisting of three members, to
be responsible for approval or disapproval of loans;
to determine the security, if any, required for approved
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loans and the terms for repayment of said loans.
On 16 December 1953, an amendment was approved
changing the number of members to seven.
3. Supervisory Committee, consisting of three members,
to be responsible for making a quarterly examination
of the affairs of the Credit Union, including audit-
ing the books.
ELECTIONS & MEETINGS
There was to be an annual meeting held during the month
of January each year. This was changed by amendment approved
20 March 1964, stating that annual meeting of the members
shall be held in each year, within the time provided in the
Act, in the County in which the office of the Credit Union is
located or within a radius of 20 miles of such office, at such
time and place as the Board shall designate. Elections for
the Board of Directors and the Committee members were to beheld
at that time. This was changed by Resolution 69-11 dated 21
April 1969 which stated that the Supervisory Committee members
would be appointed by the Board of Directors for periods of one
year.
The officers of the Credit Union were President, Vice
President, Treasurer and Clerk, all of whom were elected by the
members of the Board from their number. The officers now con-
sist of President, First & Second Vice President, Treasurer and
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d
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25X1A
Secretary.
The first annual meeting of the CIA Federal Credit Union
was held in the Projection Room, Administration Building,
at 4:00 P.M., on Friday, 30 January 1948. The first Credit
Union President was Edward R. Saunders.
PERSONNEL
At the onset, there were no paid staff employees of the
Credit Union. Agency employees were assigned to handle the
necessary clerical work.
The first actual paid employee was 25X1A
now General Manager, in March 1952. was employed 25X1A
by the Agency, given the standard clearance and training, and
then assigned to the Credit Union. The Agency was reimbursed
from Credit Union earnings for his services.
The staff has now increased until there are twenty-five
(25) full-time employees (all of whom, like are 25X1A
paid by the Agency which, in turn, is reimbursed by the Credit
Union) and twelve (12) part-time employees who are utilized on
paydays and during peak work periods. The part-time employees
are not Agency employees but are paid directly by the Credit
Union. They must be former Agency employees or must have a
spouse employed with the Agency. All employees are bonded
under
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The Credit Union management prefer to employ people with
former banking or accounting experience and the ability to
meet and deal effectively with a great number of people. Em-
ployees are trained through an on-the-job training program. Occa-
sionally, there are also training sessions available through
the D.C. Credit Union League (our local trade association) and
certain employees are selected to attend these, depending upon
the particular type of operation being stressed.
SHARES
The par value of a share, then, as now, was $5.00. A
member could pay into the Credit Union any sum from 25 to
$500.00 provided such payment did not make the share balance
in excess of $500.00. A member with a share balance of
$500.00 could deposit at the rate of $20.00 per month thereafter.
The maximum amount of shares which could be held was in-
creased as the Credit Union grew, until Resolution 69-6 approved
21 April 1969 stated that the maximum amount of shares which could
be held by any one member was $5,000.00. The monthly share de-
posit was changed to no more than $50.00 per month by Board Reso-
lution approved 26 February 1968. On 13 August 1969, the
Board approved Resolution 69-17 which declared an open season on
savings and stated that the limitations on monthly deposits and
shares would be suspended.
All Credit Union share accounts are now insured for up to
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DIVIDENDS
Dividends were computed on each $5.00 share to a member's
credit as of the close of the dividend period and until 1971
the credit union paid dividends on a yearly basis. However,
by Resolution 71-8, approved 5 February 1971, the Board changed
to a quarterly dividend period effective 31 March 1971. The
Credit Union has paid a dividend every year since its inception
with the exception of 1947.
Dividends, up to a limit of 6%, as set by the by-laws,
could be paid each year from the balance of earnings remaining
after expenses were paid, and the required amount set aside
as a reserve for bad loans. By Public Law 91-468 dated 19
October 1970, the formula for setting aside the reserve was
changed, as follows:
"10 per centum of gross income until the regular
reserve shall equal 712 per centum of the total of
outstanding loans and risk assets, then
115 per centum of gross income until the regular re-
serve shall equal 10 per centum of the total of
outstanding loans and risk assets.
Whenever the regular reserve falls below 10 per centum
or 71-2 per centum of the total of outstanding loans
and risk assets, as the case may be, it shall be re-
plenished by regular contributions in such amounts
as may be needed to maintain the reserve goals of
V per centum or 10 per centum.
"In addition to such regular reserve, special reserves
to protect the interest of members r'..all be estab-
lished-
"(1) when required by regulation; or
"(2) when found by the Administrator, in any
special case, to be necessary for that
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LOANS
A loan limit of $100.00 was established by the Board.
All applications for loans were to be referred to the Credit
Committee. Terms for repayment were between $5.00 or $10.00
per payday with the requirement that at least 25 was to be
paid on shares with each loan repayment. The rate of interest
on loans was 1% per month.
Since that time, there have been great changes made in
the loan policy, primarily in amounts of individual loans
and types of loans which could be secured from the Credit Union.
The Credit Union will now loan money to its members with the
following used as security:
1. Shares - A member may borrow up to 80% of kis shares
on deposit at a preferred interest rate of 6% per annum.
2. Cars, Trailers, Planes, Boats & Mobile Homes - These
are chattel mortgage loans for which the Credit Union requires
a title or notarized bill of sale which is held in the files for
the duration of the loan.
3. Comaker - A member may use an acceptable comaker (an
employed person over 21 willing to assume responsibility for
the loan if the member cannot make payments) as security for a
loan.
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25X1A
4. Stock - The Credit Union will accept stock certifi-
cates as collateral for loans and will lend up to 50% of
the market value of stock listed on the open market.
5. First & Second Trust Loans - Members may borrow
approximately 60% of the total purchase price or equity
on property with a 10-year repayment period.
6. Education Loans - There are two types of educa-
tional loan plans offered by the Credit Union: Both plans
are for dependents of members for higher education . The
within the school year
first plan requires that repayment be made before any further
disbursements can be made and the second is an extended
Pay-
5 vlwrt- +''
ment plan allowing up to 8-1/3 years to repay. Both plans
v?. are at a 2% interest rate.
25X1A
IN
The edu Cational loan plan was also extended on 30 Jan. 1970
to include special education for handicapped or disabled
children.
Interest rates on loans now vary from 1/2 to 1% per
month on the unpaid balance, depending upon collateral
offered and length of time required for repayment.
The Board determines the loan policies using the Federal
Credit Union Act as a guideline. Each loan application is
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submitted to the Credit Committee or to a Loan Officer for
evaluation and approval. The Committee or the Loan Offi-
cer take into consideration the amount of the loan, purpose,
applicant's income, obligations, record of payment on pre-
vious loans, if any, and age. An acceptable guarantor is
required for any member under the age of 21. (The Credit
Union will lend up to $100.00 for living expenses to a new
employee of the Agency, regardless of age and without a
guarantor). Each loan application is judged on an individual
basis. The loss rate on loans has never exceeded .073 .
As of 1 September 1966, a program of loan insurance was
instituted. All loans are covered for the unpaid balance of
the loan up to $5,000.00 so that in the event of death of a
borrower, the outstanding loan is automatically paid off. This
insurance coverage is provided by the Credit Union at no ex-
pense to the borrower.
PAYROLL DEDUCTIONS
On June 29, 1968, the Federal Employees Payroll Deduction
Law (Public Law 90-365) was approved. This law provided for
Government employees to request allotments from their pay to
financial organizations for savings purposes. The implementa-
tion of this law was approved for Agency purposes early in
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ANOMALOUS PROCEDURES :
Due to the nature of the Agency with which the Credit
Union is associated, there are certain inherent problems, not
common to other Credit Unions, which must be handled in an
other than routine manner. These problems concern the security
classification of certain of our members, and certain precau-
tions must be taken when dealing with these members.
1. LOANS
25X1A
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25X1A
25X1A
3. CORRESPONDENCE
All outside correspondence between Northwest Federal
Credit Union and covert members must be handled through Security
Division or a secure depository.
4. COLLECTION PROCEDURES
The Credit Union may not employ collection agencies
or legal procedures to collect delinquent loans without the
Agency's approval of the procedures and the firm or persons
employed to seek recovery in the case of covert members.
In a Memorandum of Understanding dated February 1965,
between the Central Intelligence Agency, Bureau of Federal
Credit Unions and the Northwest Federal Credit Union, these
three agencies agreed to certain responsibilities to be assumed
by each of them in connection with collection procedures and
verification of accounts for covert members.
5. REPORTING OF DIVIDENDS TO IRS
In a Memorandum of Understanding dated 7 January
1964 from Assistant General Counsel, Central
Intelligence Agency, to Mr. Mitchell Rogovia, Assistant to the
Commissioner, Internal Revenue Service, Department of the
Treasury, Washington, 25, D.C., it was agreed that in order
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25X1A
25X1A
This handbook covers Credit Union procedures and
25X1A
policies and is for use of PCS members It is
revised periodically in order to keep these members informed
of new Credit Union policy.
GROWTH
The Credit Union has grown at a phenomenal rate since
1947. Total assets for the year ending 31 December 1947
were $2,762.00 as compared to total assets for the year end-
ing 31 December 1970 of $23,014,316.00. The total amount
of money in shares for the year ending December 1947 was
$2,737.00 and for December 1970 was $20,198,556.00.
The annual dividend return has ranged from 4% to 6%,
depending upon earnings.
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The Credit Union had 121 accounts at the end of the
first year and, as of the end of 1970, had 25X1A
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RECEIVED I FORWARDED
OFFICER'S
INITIALS
COMMENTS (Number each comment to show from whom
to whom. Draw a line across column after each comment.)
be attached to Credit Union
History..
We suggest that the Historical
Staff retain the attached copies
of documents which are pertinent
to the history of the Agency's
Credit Union.
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Hqs
TO: (Officer designation, room number, and DATE
building)
FORM 69 $j USE PREVIOUS
3-62 1 0 EDITIONS
SEC ET El LL%tar E iTiAL USTERJUAL U3'll.L,.< ') "D
 )r)
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ROUTING AND RECORD SHEET
SUBJECT: (optional)
History of the Credit Union
FROM:
/OP
l Offi
t
i
EXTENSION
NO.
cer
or
ca
His
626 Chamber of Commerce X31.
DATE
16 November 1971
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
25X1 A
RECEIVED
FORWARDED
INITIALS
to whom. Draw a line across column after each comment.)
1.
312 Magazine X31'.
Jim:
2.
Forwarded herewith is a
draft of the Credit Union
History which the SSHO has
3
found exceptable for appropriate
reference in your Overview.
4.
25X1A
5.
6.
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7.
8.
9.
10.
11.
12.
13.
14.
15.
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USE PREVIOUS iLITDLI At
RM
610
EDITIONS
SECRET
CONFIDENTIAL ^ U SE
ONLY ^ UNCLASSIFIED
 ROUTING AND RECORD SHEET
SUBJECT. (optional)
History of the Credit Union
FROM:
EXTENSION
NO.
Historical Officer/OP
DATE
626 Chamber of Commerce H1.
11 November 1971
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
25X1A
RECEIVED
FORWARDED
INITIALS
to whom. Draw a line across column after each comment.)
203 Key Bldg
Per our conversation,
ft
2.
the attached is a re-dra
of the Credit Union History.
3
As we agreed this is a
piece which ought to go finally
to - for appropriate
4
reference in the Overview.
25X1A
5.
NOV 19
71
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6.
7.
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FORM 61 O USE PREVIOUS
3-62 I EDITIONS
PNCLA F d Fo ea' K" 00/04/18: CIA-R5i8{
SECRET ^ CONFIDENTIAL ^ USE ONLY ^ UNCLASSIFIED
X66600120669 -'SECRET
25X1A