[Congressional Record Volume 148, Number 64 (Friday, May 17, 2002)]
[Extensions of Remarks]
[Page E839]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   FINANCIAL INSTITUTIONS REGULATIONS

                                 ______
                                 

                        HON. STEVE C. LaTOURETTE

                                of ohio

                    in the house of representatives

                         Thursday, May 16, 2002

  Mr. LaTOURETTE. Mr. Speaker, I was glad to see that a subcommittee of 
the House Financial Services Committee marked up legislation this week 
to help ease regulatory burdens placed on our nation's financial 
institutions--including credit unions. As a member of the Financial 
Services Committee and one of the authors of the Credit Union 
Membership Access Act, which was signed into law on August 7, 1998, I 
would like to bring an article recently published in the American 
Banker to the attention of my colleagues and submit it for the record.
  It is important to remember that credit unions were created to exist 
solely for the purpose of offering financial services to folks within 
their defined field of membership. Unlike other financial institutions 
that can provide services to the general public, credit unions cannot. 
Also, as nonprofit entities that are member-owned, credit unions have 
consistently delivered to their members quality personal services at 
the lowest possible cost.
  On April 25, 2002, the Financial Services Committee Subcommittee on 
Financial Institutions and Consumer Credit held its second hearing on 
regulatory relief. At that time I heard testimony from witnesses 
representing the credit union community and the issues they face, such 
as the trend of credit union conversions from federal to state 
charters. Just as the Credit Union Membership Access Act was much 
needed at the time of its enactment, I believe that true regulatory 
relief for insured depository institutions and for our nation's credit 
unions is now both necessary and appropriate.
  With that in mind, Mr. Speaker I would like to submit for the record 
the text of an article from the American Banker website which comes 
from an interview with Fred Becker, President of the National 
Association of Federal Credit Unions.

   D.C. Speaks: To Credit Union Advocate, Service Record Says It All

                           (By Nicole Duran)

       Washington.--Credit unions do a better job of serving their 
     communities than other types of financial institutions and 
     could do even more if they were not hamstrung by regulatory 
     impediments, said Fred Becker, the president and chief 
     executive officer of the National Association of Federal 
     Credit Unions.
       ``Credit Unions are better at serving everyone than 
     banks,'' Mr. Becker said, referring to an American Banker 
     survey last July that revealed credit unions are on a 10-year 
     run for drawing the loudest applause from customers.
       Critics accused credit unions and their regulator, the 
     National Credit Union Administration, of not caring enough 
     about low- and moderate-income people when the agency--with 
     support from Mr. Becker's organization and others--pulled the 
     plug on a community reinvestment rule in December before it 
     took effect.
       The rule, known as the Community Action Plan, would have 
     required credit unions with community charters, to file plans 
     on how they intended to serve all segments of their 
     membership.
       Mr. Becker said that the statistics show that credit unions 
     already reach out to minorities and underserved individuals.
       Credit unions approved mortgages for 84% of applicants with 
     household incomes of $40,000 or less, while banks approved 
     62% and thrifts 72%, said Mr. Becker, citing 2000 Home 
     Mortgage Disclosure Act data. Also, credit unions lent to 70% 
     of the minorities in that income bracket who applied for 
     mortgages, while banks granted 56% of similar applications 
     and thrifts 63%, he said.
       There is a fundamental misunderstanding among critics--
     namely the National Community Reinvestment Coalition and the 
     Woodstock Institute, Mr. Becker said.
       ``Credit unions don't serve the general public,'' he said. 
     ``You can't just walk in and join a credit union. Only 
     recently have they been able to expand their membership 
     fields.''
       The critics ``may want to take a different approach in 
     dealing with us and work with us.'' he said. ``Anyone can 
     always do better.''
       The sole purpose of the tax-exempt, nonprofit institutions 
     is to serve members, and most offer higher-quality loans at a 
     lower cost than consumers can get at any other type of 
     institution, he said.
       But Mr. Becker said he envisions credit unions doing even 
     more to reach those who are not well served by mainstream and 
     fringe financial institutions, if Congress will allow it. For 
     example, credit unions could aid small-business owners who 
     find it difficult to have their lending needs met, he said.
       Credit unions' business-loan portfolios cannot exceed 
     roughly 13% of an institution's total assets. If that limit 
     were raised or lifted, credit unions could fill the void in 
     small-business lending, he said.
       Mr. Becker also wants lawmakers to allow more credit union 
     participation in the Small Business Administration's 7(a) 
     loan program. Right now only community-chartered credit 
     unions may participate, and each must get individual 
     permission. Credit unions, as an entire class, should be 
     allowed to make SBA-backed loans, he says.
       Rep. Stephanie Tubbs-Jones, D-Ohio, has written a proposal 
     to broaden SBA participation for credit unions, but her 
     attempts to attach it as an amendment to other legislation 
     have so far failed.
       Credit unions are in a Catch-22, Mr. Becker said--they 
     cannot participant in the program because they do not serve 
     the general public, but they are barred from serving the 
     general public by law. That logic is ``ludicrous,'' he said.
       Mr. Becker also called for the removal of other 
     restrictions, such as the rule that credit unions cannot cash 
     checks for nonmembers. If that rule were changed, consumers 
     without checking accounts could have a cheaper alternative 
     check-cashing outlets, he said.
       A House Financial Services subcommittee is scheduled to 
     vote Wednesday on a regulatory relief bill that would 
     eliminate the prohibition and grant other items on Mr. 
     Becker's wish list.

     

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