A new remittance program being piloted by credit unions to help immigrants transfer funds to Mexico was being assailed last week as a subsidy to illegal immigration.
"Directo a Mexico is being marketed to illegal immigrants who earned this money illegally and now want to be sending it back to Mexico. The Federal Reserve should not be facilitating this," said Tom Fitton, president of U.S. Judicial Watch, a self-styled government watchdog made famous for its legal battle against President Clinton.
The group has contacted the Fed and members of Congress and is pushing its case that the multi-billion-dollar remittance program should be halted. "This is a federal program and has a taxpayer subsidy and at least those that are here illegally should not be allowed to participate," said Fitton.
Fitton maintained the program amounts to a government-supported effort to thwart enforcement of immigration laws. "Some of the ads actually say in Spanish, 'if you're deported you don't have to worry about receiving your money,'" he said.
Judicial Watch became prominent when it sued President Bill Clinton over allegations of sexual harassment, serving as a prelude to subsequent impeachment proceedings. Then it burnished its image as a non-partisan government watchdog by suing Vice President Dick Cheney to gain access to records of secret meetings of the Vice President's task force on energy.
As many as 50 credit unions in the border states of Texas, New Mexico, Arizona and California, as well as others in North Carolina and Wisconsin have signed on to the fledgling Directo a Mexico program, which uses the Federal Reserve and the Mexican Central Bank to bypass expensive commercial remittance services and provide direct credit union or bank to bank transfers as a fraction of the cost.
John Herrera, chairman of Latino Community CU, said he expects the program to provide significant benefits for his members in the Durham-Raleigh, N.C., area, home to the fastest-growing population of Mexican immigrants in the country. "We don't want them to just spend money. We want them to save money, too," said Herrera.
But he also sees it as a way of helping the antiquated Mexican credit unions, which are not even allowed to cash checks. Currently, immigrants using the system must also have an account with the Mexican government-owned Bansefi, which operates the largest branch chain in the country, thereby facilitating transfers between a local U.S. credit union or bank with Bansefi. Eventually, the goal is to get Mexican credit unions connected, as well, said Herrera. This would boost the growth of Mexican credit unions by helping them expand services to rural communities. "Banks don't have a network in rural Mexico, credit unions do," said Herrera, who studied the Mexican system of finance during a seven-week fellowship.
The transfer costs the Fed about seven cents to effectuate. Participating credit unions and banks are free to charge their own fees. Latino Community CU charges a flat $3 fee. This amounts to a fraction of the fees charged by private transmitters, like Western Union, which charges $10 for the first $200 transferred, and a fraction thereafter.
The fee is also significantly less than the fees charged by Latino Community CU to transfer funds to Mexico or 18 other countries over the IRnet program developed by the World Council of CUs. Latino Community CU, which has enlisted 52,000 members in just six years of existence, most of them immigrants from Latin America, accounted for a third of all IRnet transactions last year, according to Hererra.
Herrera, a national figure in the immigrant-rights movement, dismissed the concerns of Judicial Watch, Rather, he contended that the low-cost Directo a Mexico system was carefully designed by the Fed, in consultation with law enforcement agencies who see a documented record of international financial transfers as a way to help fight terrorism, drug trafficking and other kinds of international crime. "Experts on national security, including FinCen, the Secret Service, OFAC, all these experts testified during the creation of the U.S. Patriot Act that it was in the best interests of the United States to gather information on the movement of money into and out of the country," he said.
