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SHERMAN OAKS, Calif. – Credit union leaders accustomed to lobbying elected officials found themselves the ones being lobbied by a U.S. congressman, who urged them to support his measure to offer “lifeline financial services” to anyone in a credit union’s field-of-membership regardless of whether they were a member. “I’m here today to lobby you,” said U.S. Rep. Brad Sherman, speaking to a luncheon meeting Feb. 22, of the San Fernando-Antelope Valley chapter of the California Credit Union League. He encouraged the crowd to put the bill high on the list of national priorities for credit unions. Sherman, a California Democrat, and Rep. Jim Gerlach, a Pennsylvania Republican, recently introduced HR 749, the Expanded Access to Financial Services Act. Co-sponsors include Paul Kanjorski (D-Pa.), Luis Gutierrez (D-Ill.), Steve LaTourette (R-Ohio) and Ron Paul (R-Texas). The measure, which had been part of the regulatory relief bill that died in the Senate last session, was resurrected by Sherman and Gerlach in the current session. It would allow credit unions to offer international remittances, wire transfers and check cashing to non-members as long as they were within the credit union’s field of membership. In a pre-emptive strike on what is expected to be fierce bank industry opposition, Sherman asked how such a position would be viewed. “Let (the bankers) come forward and say the unbanked should not be served,” he challenged. Sherman said his measure would not only help reduce the cost of remittances – which he said can range up to 15% of the amount being sent through a check-cashing outlet – but would hopefully get people into mainstream financial institutions. “There is a role for check-cashing services to play, perhaps, but ultimately we want to get people `credit unioned’ or `banked,’” he explained. “We want to get them saving. We want to get them with checking accounts. You bring them in on remittances then keep them as customers. “The first step to getting a member is to have someone who is not a member but eligible to become one to cross the threshold into the credit union,” Sherman added. And he noted that the number of potential members was huge, as was the amount of remittances being sent out of the United States. Sherman cited figures showing that more than $23 billion was transmitted out of the country in 2002 by foreign-born individuals living in the U.S. (worldwide, the figure was more than $72 billion, according to the U.S. Treasury Department). Of the amount being sent from the U.S., $10 billion was sent to Mexico in 2002 with upwards of $13 billion sent in 2003, he added. He said that remittances made up a substantial part of the recipient nation’s economies. For example, 16.2% of Nicaragua’s gross domestic product was from remittances, he said. “Immigrants sending money to their families need a place to start their transaction,” Sherman said. “For many of them, their access to financial institutions is limited.” Most of those remittances were handled by check-cashing outlets which charge high fees for the actual transfer, he said. In addition, he said the exchange rate on currencies was often unfavorable for the remitter and that he or she is generally not informed about how much the recipient will actually receive. Competition, especially from credit unions, would solve many of those problems, Sherman predicted. “I think that will help increase the standards for consumer disclosure and decrease the price and exchange rate differential that the customer is paying,” he said. “It would be good if all these folks [sending remittances] had relationships with depository institutions,” Sherman added, noting that most of them were “unbanked.” “Nearly half the Latino population in the United States has no financial relationship with a financial institution,” he said. Most often, they turn to check-cashing services for financial services, he said. Sherman said that getting people to deal with mainstream financial institutions was “so important as we look at Social Security and other aspects of our economy. “We need to get working people to save,” he said. “That starts by walking into a savings institution.” Sherman represents the 27th Congressional District in California, which takes in the San Fernando Valley. The valley is home to more than 320 check-cashing outlets, four times as many as there are banks, according to a recent survey. Asked what kind of reception he expected his bill to receive from the banking community, Sherman said the industry was “reflexively anti-credit union.” “But I think even they are going to have to recognize that this is an area where there’s insufficient competition and a need to get more players involved,” Sherman said. “We’re not taking Tiffany business away from anybody here. “This is a chance to provide financial services to a community that is disproportionately poor, financially unsophisticated, and `unbanked, uncredit unioned, undepository institutioned,’” he said. “And so these folks are not being serviced by banks at the present time. A few banks own payday lending and check- cashing services but for the most part these are people who are not customers of banks. -

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