Legislation Introduced in Congress Would Protect
Consumers' Right to Join Credit Unions
March 21, 1997

Legislation was introduced in Congress March 20 that would protect consumers' right to choose where and how they conduct their financial business.

Reps. Steve LaTourette, R-OH, and Paul Kanjorski, D-PA, introduced the Credit Union Membership Access Act, H.R. 1151, on behalf of consumers and the credit union industry. Indiana Congressman Dan Burton co-sponsored the legislation, which would modify the wording in existing federal law to ensure federal credit unions maintain the right to serve multiple employee groups, thereby giving more consumers access to non-profit credit unions as an alternative to for-profit banks.

Credit unions sought this legislation in response to numerous lawsuits filed by banks and their trade associations that seek to restrict consumer access to membership in federal credit unions.

“We're not asking for any new powers. We're simply trying to assure that employee groups that are too small to support their own credit unions will continue to have the right to be added to an existing credit union's field of membership,” said John McKenzie, president of the Indiana Credit Union League, the state trade association representing 270 Indiana credit unions. “This legislation would override the bank lawsuits and assure that people working in smaller organizations, particularly those with fewer than 500 employees, are not discriminated against when it comes to credit union access.

“If banks get their way and this option is taken away, people will have no choice but to pay higher fees and rates at banks, the types of rates that already have contributed to the banking industry's record profits of more than $50 billion last year,” McKenzie said.

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. Last October, however, a federal judge in the D.C. District Court issued an order that prohibited federally chartered 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 from employee groups already within their fields of membership until further judicial action was taken.

Credit unions appealed the case to the Supreme Court, which announced on February 18 that it would review the case during its 1997-98 term.

Regardless of what the court decides, credit unions are hopeful that Congress will pass the Credit Union Membership Access Act.

“We would like to see the Supreme Court rule in favor of credit unions and consumers. Regardless of what it decides, however, the legislation would make sure that the credit union alternative was available to workers in all size employee groups,” McKenzie said.

Since the October court decision barring credit unions from serving new employee groups, credit union representatives have met with Indiana's congressional delegation to discuss the situation. In addition, credit union members have written thousands of letters to their congressmen about the benefits of credit union membership and the importance of consumer choice.

Currently, 63 million Americans are employed by firms that are too small (fewer than 500 employees) to support their own credit union. On average, these workers receive lower wages and fewer benefits than their counterparts at larger companies. As a result, they would benefit the most from credit union membership, yet they are the very people who currently are being blocked from credit union access because of banker lawsuits. If banks win the battle, these people won't have the option of joining a credit union.

Credit union officials believe that bankers, who have been complaining about credit union competition for more than 40 years, filed the field-of-membership lawsuits in an effort to restrict consumer choice, eliminate competition and monopolize financial services.

“People know that a bank monopoly of consumer financial services is not in their best interest,” McKenzie said.

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.

Back to News Release Index