Supreme Court Will Review Credit Union Field-Of-Membership Case
February 24, 1997

 The U.S. Supreme Court announced today that it will review the credit union movement's appeal of a 1996 court decision that severely restricts membership in federally chartered credit unions.

“We're very happy that the Supreme Court has chosen to hear the field-of-membership case. We're hopeful it will decide the case in our favor so that consumers continue to have the option of joining a member-owned, not-for-profit credit union as an alternative to a for-profit bank,” said John McKenzie, president of the Indiana Credit Union League, the trade association serving 272 Indiana credit unions.

Over the past several years, the banking industry has filed numerous lawsuits against federal credit unions that seek to limit who can and cannot join credit unions. The courts predominantly have ruled in favor of credit unions. Last year, however, the banks won a lawsuit that prohibits federal credit unions from serving multiple employee groups. As a result, millions of people who work for companies that are too small to support their own credit union or are not already within a credit union's field of membership no longer have the option of joining a federal credit union.

The credit union industry appealed the decision to the Supreme Court. The court is expected to rule on the case sometime during its next term, which begins in October.

“The bankers initiated these lawsuits in an attempt to eliminate credit unions as an option for millions of Americans,” McKenzie said. “Clearly, a bank monopoly is not in the best interest of consumers. If their right to choose is taken away, people will have no option except to pay higher rates and fees at banks at a time when banks are experiencing record profits exceeding $40 billion annually.”

As credit unions wait for the Supreme Court's decision, they also will seek a legislative solution to the membership issue. The credit union industry is working with Congress to introduce legislation called the “Credit Union Membership Access Act.” This legislation would amend the Federal Credit Union Act to clarify a federal credit union's right to serve multiple employee groups, even if those groups do not share the same occupational or associational common bond as the credit union's original sponsor. The change also would reaffirm a 15-year-old regulatory policy that permits employee groups that are too small to start their own credit union to join existing credit unions.

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

“We won't be asking for any new powers with this legislation. We simply want to amend the Federal Credit Union Act to better reflect Congress' intent when it passed the law in 1934,” McKenzie said. “People should not be denied access to federal credit unions simply because they work for organizations that are too small to support their own.”

This issue does not affect Indiana's state-chartered credit unions because the Indiana Credit Union Act already permits them to serve multiple employee groups.

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