Expanded Access to Financial Services Act of 2005

EXPANDED ACCESS TO FINANCIAL SERVICES ACT OF 2005 -- (House of Representatives - April 26, 2005)

Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I think the gentleman from Delaware (Mr. CASTLE) summarized well the reasons for voting for this bill. If I had more forbearance, I would simply sit down, but I have a really nicely written speech here and will use a few minutes, hopefully abbreviating it, since so many of its points have already been covered.

Mr. Speaker, I will put into the RECORD at this point a letter in support of this bill from the National Association of Federal Credit Unions.

NATIONAL ASSOCIATION

OF FEDERAL CREDIT UNIONS,

Arlington, VA, April 26, 2005.
Hon. MIKE OXLEY,
Chairman, House Committee on Financial Services, House of Representatives, Washington, DC.
Hon. BARNEY FRANK,
Ranking Member, House Committee on Financial Services, House of Representatives, Washington, DC.

DEAR CHAIRMAN OXLEY AND RANKING MEMBER FRANK: On behalf of the National Association of Federal Credit Unions (NAFCU), the only national trade association that exclusively represents the interests of our nation's federal credit unions, I want to reiterate our support for the Expanded Access to Financial Services Act of 2005 (H.R. 749) and urge the House to bring up and pass this key legislation.

NAFCU fully supports the merits of this bill, since abuses are rampant in communities where immigrants rely on money transfer companies to send remittances to family members and others in their country of origin. Unfortunately, money transfer companies oftentimes charge exorbitant fees on those sending remittances, while imposing poor exchange rates. For example, a $1000 money transfer to Mexico via IRnet would cost $10, while the same transaction via Western Union would cost between $30 and $50 depending on the Western Union location. Also, the credit union providing the transfer may be successful in converting an un-banked potential member into a member. In reality, and in far too many cases, the costs associated with sending such remittances is essentially nothing more than another form of predatory lending. Many people do not know that credit unions can provide a lower cost and better alternative to these predatory practices. As such, NAFCU is pleased that a number of our member credit unions currently offer remittance services to their members.

Last year, in testimony before the House Financial Services Subcommittee on Financial Services and Consumer Credit during a hearing on the issue of regulatory relief for credit unions on July 20, 2004, NAFCU Board Secretary and Xerox FCU President & CEO Bill Cheney testified:

``..... NAFCU supports efforts to allow federal credit unions to offer check-cashing and money-transfer services to anyone within the credit union's field of membership. We believe this new authority, which would be discretionary and not mandatory, will allow credit unions to help combat abuses by non-traditional financial institutions that prey on our nation's immigrants and others who live and work in underserved communities.''

That statement remains true today. The credit union industry continues to work on the front line to combat financial illiteracy and to teach consumers about sound financial practices. NAFCU believes that H.R. 749 is a good step forward in creating an alternative to those who have no choices in traditional financial services.

Thank you for allowing us this opportunity to share our support for H.R. 749. We hope that the House is able to bring up and take action on this legislation in a timely manner. If you or your staff have any questions regarding remittances abuses and how credit unions can be used to help address these problems, please do not hesitate to call on me or NAFCU's Director of Legislative Affairs, Brad Thaler.

Sincerely,

Fred R. Becker, Jr.,
President and CEO.

Mr. Speaker, H.R. 749 would allow credit unions to provide lifeline services; that is to say international remittances, wire transfers, and check-cashing services to nonmembers who are within the credit union's field of membership. Now, a credit union is restricted and serves a restricted number of people. Some credit unions are based on employment, and so you may have a credit union that serves the textile workers of Los Angeles. You might have another credit union geographically based that serves the northeast San Fernando Valley. This bill only allows a credit union to serve those who are within its field of membership, who are eligible to become members of a credit union. And it makes good sense to allow those who fit within the field of membership, but are not yet members of the credit union, to get these lifeline services. These lifeline services are often priced very high, whether it be check-cashing on the one hand, or international remittances on the other. And to instead provide additional competition so that credit unions can bring the price of these services down would be very helpful to those at the very bottom of our economic ladder.

As the gentleman from Delaware points out, it also brings people who do not have a relationship with a financial institution into a financial institution. It gives them a chance to move from nonmembers who are making use of the check cashing and remittance services, to members who have a checking account, and then gradually a savings account, a credit history, and a real piece of the American financial pie, if you will; a chance to participate with all of the services that the financial institutions of this country provide.

Now, consumers who are sending remittances now, sometimes they are paying as much as 15 percent of the amount that they plan to send. So if you are sending $300 back to your parents in Mexico, you may spend $45, and this bill will provide additional competition in the international remittance area, where many credit unions providing services to those who are already members often provide these services for only $14 or less per transaction. By bringing people into credit unions, credit unions can do what they do best, and that is serve those who are within their field of membership and begin the process of providing financial education, combating predatory lending, and bringing people into the financial system.

Today, more than 200 credit unions already provide to their members wire transfer services to almost 650 points of service in 40 countries. So the credit unions are well positioned to provide these wire transfer and international remittance services.

In 2003, the Credit Union National Association adopted a group of principles designed to guide their members when providing these international remittance services. They basically say that credit unions should disclose the cost of the transaction in their advertising and brochures and in dealings with the customer, that the credit unions will provide current exchange rate information before conducting the transaction; that they will tell the customer the exact amount of foreign currency to be received by the recipient; and they will tell the sender when the funds will be available to the recipient. These kinds of high principles are important for those in the international remittance business, and to have credit unions more involved in that business and subject to those principles is an important step forward.

As the gentleman from Delaware pointed out, the size of the international remittance business is quite large. In fact, it is estimated at least at $10 billion annually. It is expected to double by the end of this decade, and there are some estimates that place it well above $10 billion annually now.

I should also mention that nearly half of the Latinos in this country do not have an account with a mainstream financial institution, and that is why it is so important in dealing with that immigrant community, as well as other immigrant communities from elsewhere in the world, that we provide this opportunity for credit unions to provide international remittance services.

I should also take a moment to recognize the work of the gentleman from Illinois (Mr. Gutierrez) who has been the leader in dealing with all of the various aspects of the remittance, international remittance issues, and to recognize my friend, the gentleman from the Inland Empire (Mr. Baca) who provided a clarifying and perfecting amendment to this legislation. I believe that this legislation will help credit unions provide services to those who need them, will drive down the price of those services, and will introduce people to our financial institutions. I urge an aye vote.

Mr. Speaker, I reserve the balance of my time.

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