ORNL FCU 75 Years

WHAT IS BILL HR 1151? Since 1934, when President Franklin D. Roosevelt signed the Federal Credit Union Act into law as part of the New Deal, federal credit unions in the United States were defined as groups tied together by a single common bond of occupation or association or by residence within a certain geographic area. In 1982, the National Credit Union Administration (NCUA), the federal regulator of credit unions, began urging employee-based credit unions to diversify their membership by offering their services to employees of other companies and businesses. This was suggested as a strategy to reduce the large number of credit unions that were closing because of their dependency on a single employer during recessions and other hard times. In short time, the strategy worked: many credit unions survived even when their original employer had gone out of business. But in 1990, the American Bankers Association and several North Carolina banks filed a lawsuit contesting this expansion, claiming the NCUA had violated the Federal Credit Union Act. The case was heard before a Washington, DC, District Court in September 1994, which ruled the NCUA’s policy was a correct interpretation of the law. The bankers appealed, and in July 1996, a US Court of Appeals overturned the decision, ruling that all members of a federal credit union must share one common bond. Riding on the success of this ruling, the bankers filed an additional suit asking for a nationwide injunction and to have the decision applied to all federally chartered credit unions with multiple groups. This ruling would mean federal credit unions could no longer add new groups to their initial field of membership (typically their originating employer). While the US Supreme Court considered the case, the Credit Union Membership Access Act (HR 1151) was introduced to Congress in March 1997 to help protect the expansion of access to credit unions. When the Supreme Court’s ruling in February 1998 favored the banking industry’s interpretation, the US House of Representatives responded quickly and passed HR 1151 in April. The bill, however, still needed to pass the US Senate. As a show of support, over six thousand credit union supporters assembled at the Capitol in Washington, DC, to urge the bill’s passage. HR 1151 passed the Senate on July 28, 1998, and was immediately signed into law by President Bill Clinton. This important law codified the eligibility of credit union access to family and household members and permitted the NCUA to regulate expanded fields of membership.

54 | 75 YEARS ORNL FEDERAL CREDIT UNION