Originally created 08/05/98

House sends credit union bill Clinton

WASHINGTON -- The House today passed and sent to President Clinton a bill that would let credit unions expand their memberships to more than one occupational group, helping them compete against banks for consumers.

Clinton said he would sign the measure, asserting that it would help "put credit unions on sounder footing." The legislation, adopted in the House by voice vote and approved overwhelmingly by the Senate last week, nevertheless lacks a provision that was in an earlier House-passed version -- backed by the administration -- that would require credit unions to abide by the fair-lending rules banks already must follow.

Those federal rules require banks to serve low-income people and minorities in their communities.

Under the legislation, all current credit union members would be allowed to remain with their institutions.

The legislation would override a 5-month-old Supreme Court ruling by letting federally chartered credit unions continue to include more than one group in their memberships, as long as each group doesn't exceed 3,000 people.

Credit unions contend they are the best source of help for people of modest means, while the banking industry has bitterly protested credit unions' exemption from federal taxes, which would be retained by the legislation.

"I would say it was a victory of David over Goliath," Rep. Paul Kanjorski, D-Pa., one of the bill's original sponsors, said before the vote. "It's of the people, by the people and for the people."

For months, a feverish lobbying campaign has pitted the banking industry -- which brought the lawsuit that reached the high court -- against the 70 million-member credit union industry. Credit unions, with their tax exemption, compete with banks by often providing lower-cost loans and other services at more favorable rates for their members, a source of irritation for many smaller community banks that are their main competitors.

The administration supports the legislation, but has pushed for fair-lending rules to be extended to credit unions.

However, Sen. Phil Gramm, R-Texas, succeeded in stripping the fair-lending rules provision out of the Senate version last week when senators voted 50-44 for his amendment to exempt credit unions from community-lending requirements before passing the whole bill 92-6.

In today's vote, the House reversed its earlier stance on the issue by adopting the Senate version.

Gramm and other critics of the 1977 Community Reinvestment Act contend that credit unions are voluntary, not-for-profit organizations and should not be subject to federal mandates dictating with whom they can do business.

But the administration and Democratic lawmakers have fervently defended the 1977 law, which requires banks to make loans to lower-income people in their communities in order to get federal approval of their expansion plans.

"The credit unions have an abominable record of lending to the poor" and minorities, contended Rep. Joseph P. Kennedy II, D-Mass. "The credit unions ought to be held to" the fair-lending requirements.


Trending this week:


© 2017. All Rights Reserved.    | Contact Us