Credit Unions Look to Congress Following U.S. Supreme Court Ruling
February 25, 1998

Today’s Supreme Court decision about federally chartered credit unions serving multiple groups within their field of membership will require America’s 70 million credit union members to go to Congress to preserve consumer choice in financial services.

The ruling and issue apply only to federally chartered credit unions (those with "federal" in their name) that serve multiple groups. It does not apply to state-chartered credit unions. Indiana has 149 federal credit unions that serve multiple employee groups.

Federal credit unions are not-for-profit cooperatives with unpaid boards of directors elected by depositors, who are the members and owners. Millions of people choose credit unions over banks because of lower fees, better rates, better service and the opportunity to have a direct say in their financial institution.

Credit unions are regulated by the National Credit Union Administration (NCUA), an agency of the federal government. In 1982 NCUA began allowing credit unions to serve multiple groups, based upon the agency’s interpretation of the 1934 Federal Credit Union Act. During the 1990s the banking industry raised objections to that interpretation and filed more than a dozen lawsuits in an attempt to prevent more employee groups from being eligible to belong to credit unions.

For six years, the courts ruled in favor of credit unions and NCUA on those lawsuits — until July 30, 1996, when the U.S. Court of Appeals overturned a credit union victory in the U.S. District Court. The case then went to the Supreme Court.

Now Congress must update the wording of the Federal Credit Union Act in order to preserve access to credit unions for millions of people. Anyone who works in an employee group that is too small to support its own individual credit union needs to be able to join a credit union that serves multiple groups. Today’s ruling puts credit union membership in jeopardy for Americans who work for companies with fewer than 500 employees and any potential group of Americans who would like to form their own credit union. Sixty-two percent of the workforce face the possibility of being blocked from credit union membership.

During the past year more than 78 newspapers across the country have editorialized in favor of credit unions on this issue and in opposition to the banking industry’s attempts to restrict consumer access to credit unions. Additionally, a bipartisan bill, H.R. 1151, the Credit Union Membership Access Act, was introduced by Reps. Steven LaTourette (R-Ohio) and Paul Kanjorski (D-Pa.) on March 20, 1997. Today, the bill has 131 co-sponsors in Congress who have signed on in its support. By passing this bill, Congress would update the Federal Credit Union Act’s wording to assure that consumer access to credit unions continues as it has existed during the past two decades. This would make the Supreme Court’s ruling irrelevant and allow credit unions to continue serving multiple groups.

More than 123,000 credit union members throughout Indiana have signed petitions, and thousands have written letters to their Congressmen about this issue in preparation for getting this legislation passed if the Supreme Court made it necessary.

"Congress has the opportunity to make sure that the banking industry lawsuits do not get in the way of people having access to credit unions as an alternative to for-profit banks," stated Indiana Credit Union League President John McKenzie. "At a time when the banking industry is enjoying unprecedented financial success—with profits of almost $60 billion annually, people paying banks an unprecedented amount of fees, and banks still controlling 92 percent of the household deposits in financial institutions—it is simply good public policy for Congress to help people by passing H.R. 1151."

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