History of the Credit Union Membership Act, H.R. 1151
“The struggle brought about by bankers’ attempt to limit the choice of consumers and employers has strengthened your member-owned credit union,” wrote Marc Schaefer, President and CEO of Truliant Federal Credit Union, in 1998, urging passage of H.R. 1151 in the U.S. Senate.
On Friday, Aug. 7, 1998, then President Bill Clinton closed an eight-year struggle between bankers and the credit union movement by signing H.R. 1151 into law. It closed what may have ended in denying Americans a viable alternative to financial services from banks.
Truliant Federal Credit Union, then known as AT&T Family Federal Credit Union, was at the forefront, first as a defendant, and later leading a grassroots political fight to ensure consumers would continue to have their choice of financial institution.
The struggle would take Truliant through courtrooms, Congress, the Supreme Court, the Capitol and eventually, to the White House.
It started in 1990 when the American Bankers Association, or ABA, a powerful banking industry lobbying group, and several North Carolina banks filed a lawsuit contesting a decision by the National Credit Union Administration, or NCUA, the federal regulator of credit unions.
The NCUA had approved a membership expansion for AT&T Family Federal Credit Union in Asheboro, allowing it to serve small employee groups not related to the telecommunications giant.
Since 1934, 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. Truliant, for example, was originally created to serve employees of Western Electric. In 1982, the NCUA began permitting credit unions to be composed of multiple unrelated employer groups.
The bankers sued, contending that AT&T Family Federal’s membership expansion was wrong and said the NCUA had violated the Federal Credit Union Act.
The case was heard before a Washington, D.C. District Court in September 1994. It ruled that the NCUA's policy of permitting multiple groups in one field of membership was a correct interpretation of the Federal Credit Union Act, furthering Congress' intent to encourage credit union growth.
The decision was appealed by the bankers. In July 1996, the U.S. Court of Appeals D.C. Circuit overturned the District Court decision and ruled that all members of a federal credit union must share one common bond. The Court of Appeals ordered the district court to apply its decision to AT&T Family Federal Credit Union. The bankers filed a separate suit asking the district court for a nationwide injunction and to have the decision applied to all federally chartered credit unions with multiple groups.
The ruling meant federal credit unions would no longer be able to add new groups to their fields of membership.
The AT&T Family Federal case was consolidated with others from the ABA. In February 1997, the U.S. Supreme Court announced it would issue a decision on the case, which would come the next year. Meanwhile, in an attempt to protect access of credit unions, the Credit Union Membership Access Act, H.R. 1151, was introduced to Congress in March 1997 to allow multiple common bonds.
On February 25, 1998, the Supreme Court issued a ruling that favored the banking industry’s interpretation of the Federal Credit Union Act: that federal credit unions may not consist of more than one occupational group having a single common bond. This ruling could have resulted in millions federal credit union members being forced to leave their credit unions.
H.R. 1151, however, was already working its way through Congress to help prevent this.
In April 1998, the U.S. House of Representatives passed H.R. 1151, but the bill still needed to pass the U.S. Senate. With momentum behind them, AT&T Family Federal helped lead and organize a nationwide grassroots effort to pass the legislation. On July 14, 1998, over six thousand credit union supporters assembled in Washington, D.C. and the Capitol, chanting “1151” to urge the bill’s passage.
The bill passed the U.S. Senate on July 28, 1998 and was signed into law by President Bill Clinton. More than just establishing the right to add employee groups, the law codified the eligibility of family and household members, and the NCUA to define community fields of membership.
The grassroots effort to pass H.R. 1151 was a concerted effort by the entire credit union movement. Even while banks outspent credit unions by margin of 14 to 1 during the fight to pass H.R. 1151, the fight ultimately strengthened credit unions as a political force to be reckoned with in Washington, D.C.