Portraying their fight against banks as a David vs. Goliath contest, the nation’s credit unions launched a national ad campaign Wednesday, a few weeks before the Supreme Court is to examine the issue of who may join credit unions.
In a case affecting millions of credit union members across the nation, the high court is scheduled to hear arguments early next month on a new restriction on who is eligible to join federally chartered credit unions. Justice Department lawyers have challenged the restriction ordered by a lower court, saying it “threatens nationwide instability and losses” in the credit union industry.
Legislation proposed in the House in March would overturn the restriction, by allowing federal credit unions to continue to include more than one group in their memberships.
“This is a consumer option that must be protected,” Rep. Zach Wamp, R-Tenn., told a news conference. He was joined by another sponsor of the bill, Rep. Paul Kanjorski, D-Pa., and credit union industry officials. They said the bipartisan measure now has 110 co-sponsors.
The television, radio and newspaper ad campaign, starting today, is aimed at telling consumers the banking industry is trying to eliminate credit unions through legal action, Wamp and other credit union supporters said.
They cited the American Bankers Association, which helped a group of banks sue the AT&T; Family Federal Credit Union of Winston-Salem, N.C., over the membership rules.
The ads also emphasize the benefits of credit union membership, such as lower interest rates on loans and lower fees, the supporters said. They declined to reveal the cost of the media blitz by the Credit Union Campaign for Consumer Choice, a coalition that includes the Credit Union National Association and the National Association of Federal Credit Unions.
Virginia McGuire, a spokeswoman for the bankers’ association, contended the credit unions’ campaign is designed to “completely turn their mandate on its head” and “pre-empt” the Supreme Court.
“This isn’t about free choice,” she said. “It’s about a free ride” for the credit union industry.
Credit unions, with some 72 million members nationwide, offer many of the same consumer services as banks but can make better deals on loans and savings rates because they don’t pay federal taxes.
As bank fees have increased, some consumer groups have advised people to put their money in credit unions instead.
By law, federally chartered credit unions must serve groups of people with a “common bond,” such as a company’s employees, members of a labor union or residents of a neighborhood.
Federal officials expanded that definition in 1982 to allow businesses too small to form their own credit unions to join existing credit unions.
Bankers challenged that expansion, and the U.S. Court of Appeals ruled in the bankers’ favor in July 1996, saying all members of a federal credit union must share one common bond.