Credit unions call passage of H.R. 1151 a victory for consumer choice
April 2, 1998

INDIANAPOLIS—Credit unions throughout Indiana today quickly reacted to passage of H.R. 1151, the Credit Union Membership Access Act, by a 411 to 8 vote in the House of Representatives. While they were busy thanking the nine Indiana Congressmen who voted in favor of the act, they also were calling Senators Richard Lugar and Dan Coats to explain the urgency of passing comparable legislation in the Senate.

H.R. 1151 seeks to restore the right of federal credit unions to enroll members from outside their original core groups and would supersede a Feb. 25 Supreme Court ruling, in a lawsuit brought by banks, that overruled the practice. The Senate now must pass comparable legislation to guarantee absolutely that consumers’ right to choose the credit union alternative is preserved.

"This vote is an important step forward by Congress in making sure that consumers continue to have the kind of access to member-owned, not-for-profit credit unions they deserve," said John McKenzie, president of the Indiana Credit Union League, a trade association representing Indiana credit unions. "Our attention now turns to the Senate and ultimately the president to get this legislation signed into law."

H.R. 1151 preserves membership for existing members and groups and gives credit unions the right to protect and strengthen their asset base by adding new members. This provision was key for the hundreds of credit unions that were founded for employees of now-defunct or downsized corporations that had no way to replace members lost through attrition.

Credit unions also would retain their tax-exempt status. Because profits are not paid out to stockholders, credit unions often can offer lower fees and higher earnings than banks, making credit unions a strong moderating factor in the financial marketplace. Their competitive influence helps keep banks’ fees lower also, benefiting consumers.

Credit unions had agreed to some compromises in the wording of the bill. Existing federal credit unions can add groups of only 3000 or fewer, and members must be located within "reasonable proximity" of the credit union. Credit unions must follow a modified form of Community Reinvestment Act rules requiring them to lend in certain poor areas—a practice that credit unions already adhered to philosophically.

"The overwhelming bipartisan support of credit unions reflected by this vote in the House is a testament to the millions of credit union members nationwide who have made their views known to Congress," said McKenzie.

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