Bill Would Place Limits On Growth Of Credit Unions Banks And Credit Unions Still Find Fault With Plan

U.S. House Banking Committee Chairman James Leach has crafted a proposal that would allow credit unions to accept some new members, while limiting their growth, in an effort to settle a fight between banks and credit unions.

The plan, presented as a discussion draft, would allow members of existing credit unions to remain with their institutions. In addition, a company’s credit union could accept outside members as long as they came from companies or groups with fewer than 3,000 employees. The rules apply to federal credit unions.

The initiative is an effort to modify the effects of a Supreme Court ruling last month that credit unions could no longer take members from outside a single group or company. The Banking Committee plans to take up the measure Thursday to try to resolve the issue this year.

The reaction from banks and credit unions was mixed. Bankers said the proposal tackled the correct issues, such as defining who can join a credit union. Still, they found fault.

“The provisions are too broad and generally lack teeth,” according to Pattie Cinelli, a spokeswoman for the American Bankers Association.

Credit unions said the plan would impose too many restrictions.

“What the committee has come up with is a complex solution to a simple problem,” said a statement released by the National Association of Federal Credit Unions.

Instead, credit union representatives want Congress to adopt a bill, endorsed by House Speaker Newt Gingrich, that would essentially overturn the Supreme Court decision and allow credit unions to accept members from different groups.