WASHINGTON -- As momentum built for Congress to overturn a new Supreme Court ruling favoring banks over credit unions, members of a key House panel took turns attacking big banks or urging they get a break from government regulations.
The Clinton administration Wednesday stuck to its position that credit unions should continue to be exempt from federal taxes, even if they are allowed by law to expand their membership groups.
The banking industry has decried in recent months the tax-exempt status of the $300 billion credit union industry.
"Credit unions should be permitted to grow, and consumer access to credit unions should be enhanced," Richard Carnell, assistant Treasury secretary for financial institutions, told a hearing of the House Banking Committee.
At issue is legislation that would reverse the Supreme Court's decision late in February by letting federal credit unions continue to include more than one group in their memberships. The measure enjoys wide bipartisan support, including the backing of House Speaker Newt Gingrich, but some lawmakers appear to want to use it as a vehicle either for getting tougher, or more lenient, on banks and credit unions.
Several Democrats on the panel who support the bill urged that credit unions, like banks and thrifts, be made subject to federal requirements for community reinvestment -- another demand of the banking industry.
"For many years, there has been mounting evidence that credit unions do not have the sterling record of serving low- and moderate-income and minority consumers that they are purported to have," testified Rep. Joseph P. Kennedy II, D-Mass. "The time has come to apply the same (community reinvestment) standards to credit unions that we do to banks and thrifts."
For Rep. Bernard Sanders, a Vermont independent, the prime target was big banks.
Rejecting the idea of taxing credit unions, Mr. Sanders assailed the banks for seeking what he called a $19 billion "bailout for their bad investments in Asia."
By contrast, Rep. Spencer Bachus, R-Ala., suggested that Congress could "level the playing field" for credit unions and banks by eliminating the community reinvestment rules for banks.
"Why do (banks) need all the regulations that we've piled on them?" Mr. Bachus asked his colleagues.
The outlook for the credit union legislation is further complicated by the possibility it could be rolled into a new House Republican package designed to revamp the nation's financial laws.
That compromise package was touted Wednesday by the House GOP leadership, with Rep. John Boehner of Ohio telling reporters, "It's high time we modernize these Depression-era laws that frankly threaten to hamstring a very important part of our economy."
Mr. Gingrich, R-Ga., said the legislation -- which would allow banks, securities firms and insurance companies to get into each other's businesses -- had been stalled for years because of "very powerful interests who all jealously guard their own turf." He called the new version "a real balance of legitimate economic concerns."
The Clinton administration and the banking industry continued to withhold judgment on the legislation.
The industry's biggest lobbying group, the American Bankers Association, had opposed a previous version of the bill. Federal regulators already have been allowing banks to get into other financial businesses on a piecemeal basis in recent years.
© 2017. All Rights Reserved. | Contact Us