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Committee on Financial Services

United States House of Representatives

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CURRENCY

The Committee on Banking and Financial Services
U.S House of Representatives, 105th Congress
James A. Leach, Chairman

Phone: (202) 226-0471 Fax: (202) 226-6052 Internet: http://www.house.gov/banking

For Immediate Release                                              
Wednesday, March 11, 1998   Andrew Biggs 226-0471

 

Opening Statement Of
Rep. James A. Leach
Chairman, House Banking and Financial Services Committee
Credit Union Hearing

 

We are here today to take testimony on the issue of membership of credit unions. Nine proposals have been circulated on this subject, some of these long before the Supreme Court’s Feb. 25 decision and a number of them since.

Credit unions are an integral part of the American way of life. They represent democracy at work in the market place. In a financial services sector which seems to change almost daily, credit unions have carved out a unique consumer niche.

Credit unions hold a little over two percent of American household assets, and this figure has changed only modestly the last 10 years. The credit union insurance fund has operated for seven consecutive years with an equity ratio above 1.25 percent, and the industry has survived economic downturns without any cost to the taxpayer.

As Chairman of this Committee, I support, and believe Americans and the world benefit from, our nation’s highly competitive financial services industry which is hallmarked by strong money-center and community banks and prosperous thrift institutions, as well as vibrant, efficient and consumer-based credit unions. Healthy, market-driven competition among and between the various forms of financial services firms is good for the consumer and good for the country.

By nature, when you have competitive situations, differences emerge between the parties. This has occurred with the credit unions after their federal regulators allowed them to expand beyond traditional markets, a move which drew objections from the banking industry.

As a general rule, for which there are few exceptions, Congress hesitates to intervene in the middle of court proceedings. Now that the Court has ruled, however, Congress has a responsibility to review the ruling and ascertain how any new interpretation of law comports with the public interest.

It is apparent to me from discussions with numerous Members of the House on both sides of the aisle that there is a general recognition that there is a degree of equity in all sides and that the precision of a legislative solution will take reasoned judgment and compromise. It is inconceivable to me, however, that Congress will allow a court ruling to cause millions of Americans to be kicked out of the financial institution of their choice.

This hearing, building on the information obtained at a similar session held last year by Mrs. Roukema, the chair of our Financial Institutions and Consumer Credit Subcommittee, will lay the basis for Committee action.

We welcome the testimony of all those who will be appearing before us today, beginning with the panel of our colleagues who have introduced legislation on this issue. Subsequent panels will include federal and state regulators and representatives from the credit union and banking industries.

Before introducing the first panel, I’d like to turn to the distinguished ranking member of the Committee, who has put forth some thoughtful views on this issue. Mr. LaFalce.

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