Dealing the banking industry a heavy political blow, House Speaker Newt Gingrich said Tuesday that he will co-sponsor legislation to let credit unions accept more members.
"The reason I am doing this is because I believe in decentralization, I believe in community-level activism, I believe in local folks helping local folks," the Georgia Republican told the Credit Union National Association's governmental affairs conference. Four thousand stunned attendees responded with three standing ovations and "Newt, Newt" chants.
"It is actually more important to have a stronger credit union movement than it was back when we only had statewide banking," Rep. Gingrich said. "We are a healthier and stronger country because we have a diversity of financial institutions."
Credit union leaders were ecstatic, while banking industry leaders winced at the news. "This will put us wherever we need to go on this legislation," said CUNA's president Daniel A. Mica.
"We regret it," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "This is the speaker of the House sponsoring legislation that the banking industry regards as profoundly anti-banking."
Though the American Bankers Association is "disappointed," chief lobbyist Edward L. Yingling said the group will try to influence any legislation so that it imposes taxes and bank-like regulation on large credit unions.
Rep. Gingrich's bombshell capped two days of supportive speeches from political heavyweights and provided strong momentum for CUNA members' planned lobbying assault on Capitol Hill Tuesday afternoon.
It also distracted from the disappointment that the Supreme Court did not rule Tuesday on a lawsuit by bankers that seeks to stop occupation- based credit unions from adding employee groups beyond their original sponsors. If credit unions lose that suit, they will need Congress to pass a law letting them continue to expand membership. A decision could be issued today.
Credit union supporters said Rep. Gingrich's backing should prompt a flood of support from reluctant Republicans, who were hesitant about angering banks and acting before the Supreme Court decision. The bill has 132 co-sponsors-86 votes shy of a majority in the House.
"People who were not listening to you before will now listen to you," said Kenneth L. Robinson, president of the National Association of Federal Credit Unions.
Leaders from the credit union and banking industries said Rep. Gingrich took his stand out of fear that Democrats would paint Republicans as enemies of the grassroots credit union movement.
Democrats outnumber Republicans nearly 3 to 1 among the co-sponsors of the credit union bill. Rep. David E. Bonior, D-Mich., promised the CUNA audience Tuesday that "as the Democratic whip, I am committed to seeing your rights protected."
But Republicans used the CUNA conference to fire back. Besides Rep. Gingrich's remarks Tuesday, House Banking Committee Chairman Jim Leach said Monday that it was "inconceivable" Congress would let credit union members be kicked out of their institutions.
Rep. Gingrich also provided Republicans some political cover by subtly extending an olive branch to bankers. "You don't have to be anti-bank to be pro-credit union," he said. "They have different roles and do different things."
Rep. Gingrich seemed to offer bankers help on separate financial reform legislation stalled in the House if they back off the credit union issue. He said he was "very willing to work with the banks" on modernizing their industry and making them more globally competitive.
Banking lobbyists said they would study Rep. Gingrich's remarks, but warned linking credit union and financial reform bills would be risky. "You don't pass bills by making them more controversial," Mr. Yingling said.