Expanded Access to Financial Services Act of 2005

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.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise today in strong support of H.R. 749, the Expanded Access to Financial Services Act of 2005. I do so as the proud representative of Hawai`i's Second District, in which our nation's credit unions have a long and rich history, and as one of my Hawai`i's 742,000 credit union members.

H.R. 749 will allow credit unions to provide expanded services to both members and non-members otherwise eligible for membership. These expanded services include the issuance of travelers' checks and money orders, and electronic funds transfers.

Most specifically, this bill, if signed into law, will in part enable many more of our citizens to transfer money overseas to family members and others with greater ease, thereby assisting our personal and financial interests. For it is a fact that our country is facing its highest level of immigration since the Depression era, with over 28.4 million foreign-born individuals residing in the United States.

My Hawai`i is no exception. According to the most recent Census Bureau's American Community Survey, Hawai`i, with 17.9 percent, has the fourth-largest percentage of foreign-born residents in the United States.

An overwhelming majority of Hawai`i's foreign-born population is from Asia. According to the Susannah Wesley Community Center, a private, nonprofit agency contracted by the State of Hawai`i to provide immigrant services, Hawai`i's largest immigrant population--fifty percent of all incoming immigrants--hails from the Philippines. It is crucial to these populations and others that our financial institutions provide quick, efficient, and economical means by which monies may be transferred to their countries of origin and elsewhere.

Unfortunately, our nation's financial infrastructure has been slow to offer such services, especially in the less urbanized and rural parts of our country such as my district where our credit unions have long filled an important community-based financial services function. As a result, there is a growing population of ``unbanked'' individuals, particularly immigrants, and a costly and inefficient money transfer process.

The World Council of Credit Unions, along with the Credit Union National Association, offer credit unions a remittance product called the International Remittance Network (IRnet). IRnet is an electronic funds transfer service providing credit union members a safe and inexpensive way to send money overseas and domestically, and provides service to over 40 countries in Latin America, Asia, Africa and Europe, including the Philippines, Mexico, and Australia.

IRnet significantly decreases the costs for individuals to transfer funds overseas. Over the past four years, the advent of IRnet and enhanced competition among our financial institutions offering money transfer services has driven down remittance costs for consumers. The average cost today of sending $300 to Mexico is between $13 and $14, or 4-5 percent of the amount sent, compared to the average cost four years ago, which was between $30 and $32, or 10-11 percent.

This legislation will expand the range and number of people eligible for the use of IRnet and thereby lower the costs paid by the consumer for these services through increased competition within the marketplace. In the process, it will also encourage a larger number of our newly-arrived citizens and residents to utilize our credit unions and other financial services.

H.R. 749 will not harm or otherwise risk our country's financial or monetary security, as IRnet utilizes real-time monitoring of transactions against the Specially Designated Names, SDN, list from the Office of Foreign Asset Control. What this bill will do again is to help more people in our communities with more and better ways to provide for their personal and economic needs and obligations overseas while preserving basic homeland security protections.

Mr. Speaker, I commend my colleague from Pennsylvania, Mr. Gerlach, for introducing this bill. I look forward to working with him and our nation's invaluable credit unions to see this measure through into law.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 749) to amend the Federal Credit Union Act to provide expanded access for persons in the field of membership of a Federal credit union to money order, check cashing, and money transfer services, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 749, as amended.

Mr. Speaker, I yield myself 5 minutes.

Mr. Speaker, I rise in support of H.R. 749, the Expanded Access to Financial Services Act of 2005, introduced by the gentleman from Pennsylvania (Mr. Gerlach) and the gentleman from California (Mr. Sherman) and favorably reported to the House by the Committee on Financial Services.

This bill makes a simple change to the Federal Credit Union Act to allow Federal credit unions to offer check cashing and money transfer services to anyone within their field of membership. H.R. 749 will serve the dual purpose of lowering the cost to consumers of both check cashing and wire transfer products, while providing credit unions the opportunity to establish relationships with individuals who are currently unbanked.

Money transfers by individuals living and working in the U.S. to Latin America are currently estimated at $10 billion annually, and should more than double by 2010.

As the remittance market continues to grow, there becomes a significant danger in depriving customers of low-cost remittance products, thereby driving them to underground service providers that evade regulatory oversight. H.R. 749 will allow credit unions to offer remittance products to individuals who qualify for membership while promoting greater transparency within the remittance market. This improved transparency will enhance the ability for regulators and law enforcement agencies to track wire transfers used for illegal activity. Increasing the ease with which regulators and law enforcement agencies can follow the money trail is consistent with the recommendations of the 9/11 Commission on Terrorist Financing.

Allowing Federal credit unions to offer products and services to all consumers within their field of membership would provide further benefits to our economy by allowing credit unions to establish relationships with individuals who are currently ``unbanked.'' Many users of remittance services are recent immigrants and should be empowered with the knowledge and resources necessary to open personal accounts at mainstream financial institutions. Studies indicate that as many as 10 million American households do not have a bank account. Establishing and successfully managing a personal

account with an insured depository institution can lead to greater economic self-sufficiency and long-term financial security. Particularly for low- and moderate-income Americans, opening a checking or savings account can be an important first step in establishing a credit history, which can unlock doors to other financial opportunities.

I believe that this bill is a positive step toward ensuring that millions of unbanked Americans have access to secure, low-cost remittance products, while drawing these same customers into the regulated financial mainstream. I therefore encourage all of my colleagues to vote in favor of H.R. 749.

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

Mr. Speaker, I yield such time as he may consume to the gentleman from the Commonwealth of Pennsylvania (Mr. Gerlach).

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding me this time, and I thank the gentleman from Ohio (Mr. Oxley) for taking up this bill so quickly, and the gentleman from California (Mr. Sherman) for his work on behalf of this important legislation. I would also like to thank the gentleman from California (Mr. Baca), the gentleman from Illinois (Mr. Gutierrez), the gentleman from Pennsylvania (Mr. Kanjorski), the gentleman from Ohio (Mr. LaTourette), and the gentleman from Texas (Mr. Paul) for their efforts as well.

Mr. Speaker, I rise today to encourage my colleagues to support H.R. 749, the Expanded Access to Financial Services Act. This bipartisan legislation will amend the Federal Credit Union Act to allow credit unions to offer money order, check cashing, and wire transfer services to anyone who is eligible to be a credit union member, whether or not they have credit union membership. The bill is identical to section 307 of H.R. 1375, the Financial Services Regulatory Relief Act, which passed the House by a vote of 392 to 25 on March 18, 2004.

H.R. 748 reaches out to individuals who, for whatever reason, do not have established bank accounts. These unbanked Americans, estimated to be up to 10 million households, are frequently charged high fees for a variety of financial services. By bringing competition to the marketplace, we can provide our constituents access to lower-fee alternatives.

Many of those who would utilize these services are hardworking immigrants trying to wire money home to help provide for their families. According to the Pew Hispanic Center and Multilateral Investment Fund, $10 million is sent back to Latin America each year, a figure that can more than double in the next 5 years.

It is my hope that the underserved persons who are reached by this bill will be able to use these services to establish a credit history that can then allow them to take advantage of other financial services. An initial positive experience with a depository institution may encourage the ``unbanked'' to explore other financial products.

Further, bringing immigrant workers into financial institutions is important for national security. Credit unions are required to follow the recordkeeping and reporting requirements of the Bank Secrecy Act. They must also determine that customers are in the field of membership, a process that would involve personal documentation review. Having international money transfers go through regulated financial institutions makes it easier for law enforcement officials to learn of and follow suspicious activity.

This legislation has the support of the National Credit Union Administration, the Credit Union National Association, and National Association of Federal Credit Unions.

H.R. 749 is a good, bipartisan bill. It reaches out to communities that have historically been left out of the financial services arena and encourages hardworking Americans to develop relationships with financial institutions. I hope the Members will choose today to give their constituents access to affordable financial services.

Mr. Speaker, I rise in strong support of H.R. 749, the Expanded Financial Services Act of 2005.

This legislation will allow credit unions to offer services to individuals who are in their field of membership, not just those who are members.

This bill will open up the marketplace, and will provide lower-cost services to underserved individuals. The result will be that thousands of unbanked households will be able to enter the economic mainstream.

H.R. 749 includes a provision that I introduced in the Financial Services Committee that will allow these individuals to use credit unions to send international and domestic electronic fund transfers.

This provision will help underserved individuals to send and receive funds to and from their families.

Currently there are about 10 million households in the United States that do not have access to banking. This bill will help those individuals by giving them lower-cost financial alternatives to send funds to their families.

H.R. 749 will promote competition in the money transfer industry, resulting in lower fees to consumers.

By allowing credit unions to compete, we will bring huge savings to individuals transferring money and provide more money for those who need it most. The money people save by using credit unions can be reinvested in our economy, which helps all Americans.

I urge my colleagues to vote yes on H.R. 749, so that thousands of underserved Americans can join the financial mainstream and access the American dream.