Credit Unions to Seek Legislative Solution to Membership Issue
January 21, 1997

 The credit union movement will look to Congress for a legislative solution to the field-of-membership case now pending in the courts.

The U.S. Supreme Court announced today that it has put in its “pending” file the credit union movement's appeal of a 1996 court decision that restricted credit union membership. The court will meet Feb. 14 to decide whether or not to review the cases in its pending file.

While waiting on the Supreme Court's decision, credit unions will continue to seek a legislative solution to the membership issue. Legislation will be introduced in Congress that will clarify wording in the Federal Credit Union Act to ensure people are not restricted from credit union access, regardless of what the courts decide.

Credit union representatives in Indiana already have met with members of Indiana's congressional delegation. In addition, credit union members are being encouraged to write to their congressmen about the benefits of credit union membership.

Bank trade associations have filed lawsuits over the past several years trying to restrict credit union membership. Federal courts have predominantly ruled in favor of credit unions and against bankers. Last October, however, a federal judge in the Washington, D.C., District Court sided with the bankers by issuing an order that prohibited federal credit unions from accepting new groups into their fields of membership and accepting new members not related to their original sponsor groups.

In December, a federal appeals court gave credit unions — and consumers — some relief. The court said credit unions could continue taking in new members already within their fields of membership until further judicial action was taken. It is not known at this time how the Supreme Court's decision to put the case in its pending file will affect this ruling.

“These lawsuits by bankers are an attempt to restrict consumer choice. The bankers are trying to eliminate credit unions as an alternative to the for-profit banking system,” said John McKenzie, president of the Indiana Credit Union League. “But consumers should have the right to choose how and where they conduct their financial business. Bankers shouldn't have a monopoly on financial services.”

Because of bankers' lawsuits, federal credit unions still are restricted in many cases from adding new employee groups to their fields of membership. Consequently, millions of people who work in employee groups that are too small to support their own credit union and are not already in a credit union's field of membership no longer have the option of joining a credit union.

This issue affects 152 federal credit unions in Indiana that have multiple groups in their fields of membership. It applies only to federally chartered — not state-chartered — credit unions. Credit unions can continue to serve current members.

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