Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Wednesday, Jul. 29, 1998
Senate OKs credit union bill
Measure reviving competition with banks lacks fair-lending provision
By MARCH GORDON
Associated PressWASHINGTON -- By an overwhelming vote, the Senate passed a bill Tuesday that would help credit unions compete with banks for customers.
But the legislation lacks a House provision -- backed by the Clinton administration -- that would require credit unions to abide by the fair-lending rules banks already must follow. The federal rules require banks to serve low-income people and minorities in their communities.
After the 92-6 vote, White House spokesman Barry Toiv said the administration will urge lawmakers to rework the Senate bill to include the fair-lending provision.
The legislation, approved 411-8 by the House in April, 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. Portraying themselves as waging a David-vs.-Goliath struggle with banks, credit unions contended they are the best source of help for people of modest means.
``For decades, the American dream has been made a reality by credit unions,'' said Sen. Alfonse D'Amato, R-N.Y., chairman of the Senate Banking Committee and a chief sponsor of the legislation. ``These cooperatives reach out to individuals, associations and communities who have had the door slammed in their faces by other financial institutions.''
``Americans are one step closer to securing the right to choose where they conduct their financial business,'' Ken Robinson, president and CEO of the National Association of Federal Credit Unions, said after the vote.
(Wayne Vann, president of Navy Army Federal Credit Union in Corpus Christi, said the Senate's action Tuesday is another step toward getting credit unions back to where they were before the fight with banks began.
(``It's not giving us anything. It's just not taking away anything we had,'' Vann said. ``Basically, it just lets us go back to where we were.''
(Navy Army Federal Credit Union, with about 31,000 members and assets of $140 million, didn't lose any membership groups after a lower court ruling in 1996 limiting who could join federally chartered credit unions, but hasn't accepted any new groups either.
(Vann said credit unions hold about 2 percent of the financial services market and aren't a threat to banks.
(If the legislation approved by the Senate on Tuesday is signed into law, some credit unions may have ``some immediate interest in getting some more members, but I don't see it as a big trend,'' Vann said.
(David Brooks, president of state-chartered City Employees Credit Union, which serves city, port and Regional Transportation Authority employees and their families, said he also is encouraged by the Senate measure.
(``A lot of us have seen this as a consumer choice bill instead of a bank versus credit union bill,'' Brooks said.
(Though not affected the same as federally chartered credit unions, City Employees Credit Union and other state-chartered credit unions joined the fight, fearing a similar fight with the banking industry at the state level.
(The result was a massive grassroots effort to generate support for credit unions and the services they provide to consumers, Brooks said. As late as last week, 6,000 people rallied in Washington, D.C., he said.)
The banking industry has bitterly protested credit unions' exemption from federal taxes, which would be retained by the Senate bill.
The Senate vote ``is a real loss for taxpayers,'' said William McConnell, president of the American Bankers Association, the industry's biggest lobbying group. ``Credit unions . . . now have a license for unbridled expansion of their billion-dollar annual tax subsidy.''
For months, a feverish lobbying campaign has pitted the banking industry -- which brought the lawsuit that ended up in 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, as in the House bill.
But Sen. Phil Gramm, R-Texas, succeeded in stripping the fair-lending rules provision out of the Senate version Monday, when senators voted 50-44 for his amendment to exempt credit unions from community-lending requirements.
Gramm argued 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 Sen. Paul Sarbanes, D-Md., said the 1977 Community Reinvestment Act, which requires banks to serve lower-income people in their communities, ``has worked well and there is every reason why it also should apply to the credit unions.''
Before the final vote on the bill, the Senate rejected, 59-39, an amendment that faced even stronger opposition from the administration. The measure proposed by Sen. Richard Shelby, R-Ala., would have exempted small community banks from the 1977 law requiring regulators to consider a bank's lending record to minorities and low-income applicants when ruling on expansion proposals.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web