House Passes Bill Allowing FCUs to Serve Non-Members

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The House took another major step last week towards blurring the traditional common bond by passing a bill that would allow federally chartered credit unions to provide limited services to non-members within their fields of membership.

NCUA Chairman JoAnn Johnson applauded the measure, saying it will provide low-cost services, such as check cashing, wire transfers and money orders, to many individuals, particularly immigrants, who are at the mercy of high-cost check cashers and money servicers.

"It offers these individuals another opportunity to transact business with an insured institution that is regulated by the U.S. Government," said Johnson. "These are people who are getting taken to the cleaners, who can least afford it. And it helps them establish a relationship of trust with a financial institution."

John McKechnie, CUNA's chief lobbyist, acknowledged the bankers' opposition to a bill that would expand credit union services to non-members, but suggested that the continued need for these services in low-income and immigrant communities shows a failure on the banks' part to seek these markets. "The bankers' clearly don't want credit unions to serve these people but they also don't want to serve them either," said McKechnie.

Despite its passage by the House, the bill has a long way to go before final adoption and is also being offered in several different forms. For instance, another bill, less likely to be passed, would allow credit unions to offer these services to anyone, not just people within their fields of membership. A bill in the Senate, which will now consider the issue, would expand remittances for immigrants and including these credit union provisions. And regulatory relief legislation still being drafted, including the CU Regulatory Improvements Act, known as CURIA, will include the non-member provision among a variety of other issues.

"We are open to looking at any and all strategies; either having it passed on its own or as part of a total package," said McKechnie.

At least six states, including California, Arizona, Georgia, Michigan, Wisconsin and New Mexico, have passed similar legislation in the past two years allowing state-chartered credit unions to provide those services to non-members, while several others are also debating the matter.

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