He said after receiving a call in which he was told the credit union could no longer add additional companies, he realized the situation was serious.

Credit union trade organizations saw the writing on the wall: The courts could decide in favor of banks. They worked with members of Congress in advance of the Supreme Court decision to introduce a simple two-page bill, the Credit Union Membership Access Act (H.R. 1151). However, Congress was not yet acting on the measure.

“We introduced the bill in early 1997,” said John McKechnie, who at the time was vice president of legislative affairs at CUNA. “We started to gain co-sponsors for the process, but a lot of members of Congress said they wouldn't do anything with the bill until the courts finished their work.”

The bill was introduced by Rep. Paul Kanjorski (D-Pa.) in March 1997. It aimed to amend the language of the Federal Credit Union Act so it would allow credit unions to serve multiple groups.

“It sounded like something that could help people out,” Kanjorski told CU Times. He said he came around to the religiosity of that idea after he met with credit union members and heard how they felt about their cooperatives.

“It really is something that goes to the soul of people with their financial matters, I think it's healthy,” he recalled.

Members in the industry had to pull together to pass the bill. It languished in the House for almost a year after being introduced, until the Supreme Court announced its decision: In a 5-4 vote on Feb. 25, 1998, the court ruled in favor of the banks.

That decision accelerated the push to pass the bill. However, one of the initial challenges was to find a Republican co-sponsor for a bill that would benefit credit unions. Banks were deeply entrenched with some Republican members of Congress and the GOP controlled both the House and the Senate.

The search ultimately ended in a nod from the 27^th ranking member of the House Banking and Financial Services Committee – as it was known as at the time – Rep. Steven LaTourette (R-Ohio).

Some observers credit the bill’s support by then-Speaker of the House Newt Gingrich (R-Ga.) as the reason why it was able to move through the House so quickly. Gingrich signed onto the bill on Feb. 24, 1998, one day before the Supreme Court’s decision.

Despite the late support, after Gingrich added his name to the bill Republicans in the House supported the bill in droves. Gingrich announced his support during CUNA GAC that year, as the Supreme Court handed down its decision.

Many in the credit union space saw the Supreme Court decision as a potential disaster to the future of credit unions.

Dan Mica, who was new in his position of CUNA president/CEO, said, “The one thing that my general counsel told me is that we could lose this case and it would shut down credit unions.”

The timeframe from when the Supreme Court handed down its decision until the House Banking and Financial Services Committee passed the bill was a truncated few months.

During a March 11, 1998 committee hearing, Chairman Jim Leach (R-Iowa) opened the discussion of the bill with a condemnation of the Supreme Court ruling.

“It is apparent to me from discussions with numerous members of the House, on both sides of the aisle, that there is a general recognition that there's a degree of merit in all sides, and that the precision of a legislative solution will take reasoned judgment and compromise,” he said. “It is inconceivable to me, however, that Congress will allow a court ruling to cause millions of Americans to be kicked out of the financial institution of their choice.”

The push to pass the Credit Union Membership Access Act was now in full swing. However, the bill was not out of danger. During the debate at the House Banking and Financial Services Committee, a vote was called for another measure and Leach called for a recess.

During the recess, he told Mica there were not enough votes to pass the measure.

“He told me during the break, ‘You are at least one or two votes short, but my recommendation is that if you don't get another vote, you pull the bill because they have a dozen other amendments that would put credit unions out of business,’” Mica said of the discussion.

“Talk about swallowing hard,” Mica said.

He made a call to Gingrich’s office, who in turn made a few calls.

“We got the votes. We ended up winning by one vote,” Mica said.

H.R. 1151 passed out of the House Banking and Financial Services Committee on March 30, 1998.

“A lot of people don't realize that if we had lost in the House, in that committee, it would have disassembled the whole credit union movement,” Mica said. “If we had lost the whole thing, a huge percentage of credit union members would have received notes saying that, under a legal decision which was not overturned by the Congress, you have to give up your membership at your credit union.”

However, H.R. 1151 was turning into something altogether different from what credit unions had sought.

It began to morph as the bill moved through the legislative process. Kanjorski summed up the bill’s move through Congress as akin to carving ones initials into a tree.

“As the tree grows, sometimes the initials become distorted. That happens with legislation,” he said. “The things you pay little attention to, as you are formulating, they sometimes have a dastardly effect on you or the people around you or the institutions around you that you never anticipated at the time.”

The bill fell victim to the whims of its opponents. Bankers pushed for changes to the bill, as did others within the government.

Prompt Corrective Action was a policy devised during the failure of the Federal Savings and Loan debacle. During this time it was being applied to the banks and savings and loans and the then chief counsel to the Senate Banking Committee Richard Carnell pushed for it to include credit unions, but the credit unions were able to fight it back.

“Before Congress does anything, they check with the Treasury Department, and in the Treasury, they check with the Undersecretary for financial institutions. That was Rick Carnell,” Bill Hampel, who was an economist at CUNA at the time, told CU Times. Carnell wanted to add PCA to the bill. “Basically, Congress wouldn't have passed (H.R. 1151) without Treasury's blessing and Treasury would not bless it without prompt corrective action included.”

H.R. 1151 was also compromised with a cap on member business lending, as well as a change in how a credit union can convert to a mutual savings bank.

However, there were other amendments that could have changed the face of the bill that were defeated. An attempt to add H.R. 10 to the legislation, which later became Graham-Leech-Bliley, was met with a fiery and passionate speech by Kanjorski, who observers said effectively argued against a rule on two separate issues. After Kanjorski’s speech, Rules Committee Chairman Gerald Soloman (R-N.Y.) pulled it from the floor.

“I spent 26 years in Congress and I never experienced a chairman of the rules committee pulling the rule, as was done in that case by Gerry Soloman,” Kanjorski said. “He actually pulled the rule after we got particularly testy on the floor.”

When it finally came up for vote, a deal was struck to pass H.R. 1151 on a voice vote. That could have killed the bill’s momentum once it reached the Senate, according to Mike Radway, chief policy adviser to NCUA Vice Chairman Rick Metsger, who was legislative director for Kanjorski at the time.

There was a convergence of three things that helped the bill along: The Campaign for Consumer Choice, which provided grassroots support in an unprecedented way, the immediacy of the Supreme Court decision, and the acceleration of overwhelming support in the House.

“It made the Senate say they needed to pass this,” Radway told CU Times. “They added some things that credit unions are less happy with, but at least they solved the immediate problem of having credit unions divest their members.”

Karen Thurmond (D-Fla.) asked for a recorded vote and H.R. 1151 passed the House by a 411-8 vote, giving the bill the momentum it would need in the Senate.

Support on the Senate Banking Committee would prove to be challenging, as the committee was split among Democrats in support of the bill and Republicans opposed it. H.R. 1151 came up for vote out of the Senate Banking Committee on May 21, 1998.

“The committee was split, 50/50,” Mica said. “Republicans voted against it, but (Committee Chairman Alfonse) D’Amato (R-N.Y.) voted with us.”

The Senate passed the bill on July 28, 1998, in a 92-6 vote. It returned back to the House for approval of changes made by the Senate, and was sent to the White House on Aug. 4, 1998. Just three days later, on Aug. 7, President Bill Clinton signed the bill into law in the Oval Office.

Read more about the massive grassroots campaign that helped pass H.R. 1151 and how that effort changed credit union messaging to Congress and the public in the second part of CU Times’ H.R. 1151 coverage.