To protect their membership bases, more than 50 federal credit unions have asked for permission to switch to a state charter, a regulator said Wednesday.

Two days after the Supreme Court announced it would hear a case challenging whether federal credit unions may serve employees at more than one company, a growing number are asking to recharter in states where laws clearly allow them to serve multiple membership groups, said David L. Paul, commissioner of the Colorado Financial Services Division.

According to the National Credit Union Administration, 65 federal credit unions have asked to change charters.

While that's a small share of the 3,586 federal credit unions affected by the case, Mr. Paul predicted more institutions will follow.

Enticed by the more liberal laws in 45 states, roughly 200 institutions have "inquired" about changing charters since July. That's when a federal appeals court ruled that members of an occupation-based federal credit union must have a single, common bond.

NCUA spokesman Robert Loftus said switching charters is a "logical thing for a federal credit union to explore."

Speaking on behalf of the National Association of State Credit Union Supervisors, Mr. Paul told House Banking's financial services subcommittee that serving more employees from multiple companies ensures a credit union's "economic viability."

Mr. Paul joined a host of credit union industry representatives asking Congress to preserve NCUA rules allowing them to add new members and opposing bankers' demands that many large credit unions pay income taxes.

"The ability to serve more than one group is consistent with the purpose of state chartered credit unions," he said. "It should be consistent with the purpose of federally charted credit unions as well."

Bankers Wednesday complained that aggressively expanding credit unions are using their tax breaks to subsidize financial services to wealthy members.

But lawmakers appeared reluctant to take sides.

Rep. Marge Roukema, who conducted Wednesday's hearing, said the disputes were "highly controversial . . . I seriously doubt Congress will take preemptive action while the Supreme Court has the case under review," the New Jersey Republican said.

House Banking Committee Chairman Jim Leach agreed that the tax exemption gives credit unions a competitive advantage, but questioned whether it would it would be good public policy to restrict the nonprofit institutions.

Rep. Bruce Vento, D-Minn., said Congress must clearly define the boundaries of credit union membership, but added that the appeals court ruling is too strict. "Credit unions must be allowed to change," he said.

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