FOR IMMEDIATE RELEASE
February 3, 1999

Contact: Mark Wolff or Jennifer Porter Gore
(202) 682-4200

WASHINGTON--The Credit Union National Association testified this morning before the House Subcommittee on Financial Institutions and Consumer Credit that the new rule for credit union membership complies with the Credit Union Membership Access Act (H.R. 1151).

"NCUA has done a responsible job providing rules to implement the Credit Union Membership Access Act," said Diana Roberts, CUNA's witness. Roberts is president and CEO of Hershey Federal Credit Union, Hershey, Pa. Hershey FCU has just over $20 million in assets and serves 6,500 members. The National Credit Union Administration (NCUA) implemented the new rule, which became effective January 1.

Roberts also noted the regulations actually added many new limits on where and how credit unions can serve additional groups of members. "The agency's rules are consistent with the statute," she added.

Subcommittee chairwoman Marge Roukema, R.-N.J., called for the hearing to review NCUA's implementation of the law Congress passed overwhelmingly, and the President signed, in August.

H.R. 1151 overturned a Supreme Court ruling that had barred credit unions from serving multiple groups. Banking trade groups, seeking to prevent consumers from joining credit unions, have also criticized the new rule. In the latest move against credit unions, the American Bankers Association in early January filed suit in U.S. District Court to challenge the new rule. CUNA has intervened in the case on behalf of credit unions.

CUNA's testimony on the rule emphasizes that the rule permits chartering of new small credit unions that are economically viable. CUNA added that obstacles to creating new credit unions include: (1) finding people to volunteer the time and expertise to start a credit union from scratch; and (2) the cost of the technology needed to compete in today's financial services market.

In addition, the statute doesn't say the regulator should deny a group the opportunity to join another credit union if it does not want to organize a new one.

CUNA also answered the subcommittee's questions about how the rule:

• views overlaps, or competition between credit unions
• determines if a credit union facility can serve a group's members
• defines a "household" or "immediate family member" to decide who is eligible for credit union membership
• identifies a local community, neighborhood or rural district to offer service in that area.

With its network of affiliated state credit union leagues, Credit Union National Association serves more than 90% of America's 11,300 credit unions, which are owned by more than 76 million consumer members. Credit unions are not-for-profit cooperatives providing affordable financial services to people from all walks of life.