I can say, however, that most Defense Credit Unions are large and with very few exceptions, based on conversations that I have had with fellow credit union managers, that my views are shared by manyand I would risk saying strong-majority.

With these qualifying remarks, I feel my testimony should be considered-even though somewhat knowledgeable-to be the position of the officials of the credit union that I manage, Pease AFB Federal Credit Union.

When I was vice president of CUNA International, as now, I fought for the introduction of Federal share insurance for credit unions.

As former chairman of the six States-in New England-that comprise District 11 of CUNA International, I can report that for several years the States in New England have also favored share insurance and have attempted repeatedly to persuade CUNA delegates to seek such legislation.

I have been a leader in the crusade for share insurance. However, I have always failed to persuade CUNA delegates to take a favorable view until their last annual meeting in May of this year.

I feel certain that they were persuaded to vote favorably on share insurance this year because they felt that bill S. 3822 would ultimately result in the Congress passing favorably on insurance for credit unions.

Therefore, as a longstanding fighter for Federal share insurance, I wish to thank Senator Bennett and the other supporters of share insurance for causing the organized credit union movement to make a decision that I personally feel, as do many of my colleagues, should have been made years ago.

I realize that the House Banking and Currency Committee will be considering H.R. 17729 as an alternate share insurance plan. It appears likely that the Senate and the House may ultimately have a conference session to agree on the final language of a share insurance bill and what it may include.

I am not here to offer argument for or against the differences between the two bills. I feel these need much discussion and candid determination of the objectives and purposes before conclusions are reached. Certainly, any document written can and should be considered for improvement before actual enactment.

In conclusion, having been asked to appear as a witness concerning the question of share insurance, I wish to state that even though credit union losses have not been great, any loss to a credit union member is unjustifiable. Therefore, I firmly believe that Federal share insurance is an absolute necessity and that a bill, hopefully one that is satisfactory to all parties, can be enacted and put into effect at the earliest possible date.

I feel there are many people more qualified than I to determine the mechanics, the costs, and the procedures. Therefore, I merely wish to support the principle of Federal share insurance for the safety and benefit of millions of credit union members, as well as for credit unions themselves as a corporate body.

Mr. Chairman, insofar as I am able, I would be pleased to try and and answer any questions on which you feel my opinion may be of value.

Senator BENNETT. Are you aware that there are two bills in the House?

Mr. GRANT. Yes, sir. I was not when I wrote this statement, but I am now.

Senator BENNETT. You are now?

Mr. GRANT. Yes.

Senator BENNETT. The other bills is H.R. 17722

Mr. GRANT. Yes, sir.

Senator BENNETT (continuing). Which is virtually identical to S.

3822.

Mr. GRANT. Yes, sir.

Senator BENNETT. You heard Mr. Gannon's testimony and his answers to questions. Do you have any comments you would like to make as a result of that?

Mr. GRANT. I feel with very little exception-and we would have to go back I think through the list of questions in order for me to recall them I think with very few exceptions I am pretty much in total agreement with Mr. Gannon's answers to your questions.

Certainly there is room, for example, in the cost factor, which seems to be a big issue in this, for debate here. I am sure that ultimately the people with the proper knowledge and actuarial experience will be able to give us some assistance as to what is proper.

My only position with respect to the cost issue is that we must have Federal share insurance and that we must pay what it must cost. And beyond that I have very little opinion.

Senator BENNETT. I am not sure that technically this is an actuarial issue. Actuarial figures are usually based on life expectancy of people, or rates of accidents or home other more predictable base.

The future of this program will be governed in part by general economic conditions or regional and local economic conditions.

The only experience we have had is that of the FDIC over these years, and that is why we use that experience as the basis for the figures I put into my bill.

But I recognize, as Mr. Gannon did, that it is possible to build a pattern maybe out of a combination of the one-twelfth percent for a period of time and then reduce it to a lower figure which could accomplish the purpose.

Mr. GRANT. Mr. Chairman, I think the purpose of building the fund to a specific percentage and the premium thereafter are separate questions. I believe we can go into great detail on them. And again I don't feel that I am the most qualified to speak on this.

I only feel very strongly one way, and that is we must pay what it must cost.

I do feel, however, that there might be during these discussions some special considerations on these premiums given to the newly organized credit union, as obviously a percentage factor charged to a credit union such as my own which is well established might be a little bit more damaging to a credit union that was organized last week.

So these are things that have to be taken into consideration. But my only true position is that we must have it, and what it must cost, we must pay.

Senator BENNETT. Do you feel that the administrative provisions in the bill would be onerous or difficult for you to carry out as a credit union manager?

Mr. GRANT. No, I do not, Mr. Chairman. I think perhaps the alternate bill that will be considered by the House is perhaps more flexible. However, I do not feel that under the National Credit Union Administration the S. 3822, which spells things out a little bit more clearly and in detail-from a personal point of view as a manager, I and officials of my credit union do not feel it would be difficult to live with. We do feel, however-and I might preface my next remarks by saying I am only vaguely familiar with the differences in the position that CUNA international representatives are going to take, and so I cannot speak with great authority on their opinions. I am only vaguely familiar with them. And I do think that with those that I am familiar with they are at least meritorious enough to bear consideration before final determination is made.

But as for your question and a direct answer, no, sir, I feel we can live with it.

Senator BENNETT. Of course, we are waiting to see what specific suggestions CUNA will finally make, and they will certainly be considered. I am as anxious as anyone else to get a bill which will solve the problem with the least burden to the members of the credit unions, of which I am one.

Thank you very much, Mr. Grant. I appreciate your testimony. There are no further questions.

Mr. GRANT. Thank you, sir.

Senator BENNETT. Our last witness is Mr. Benny Kass, National Consumer Law Center here in Washington.

Mr. Kass, you may proceed as you please. (The prepared statement of Mr. Kass appears on p. 17.)

STATEMENT OF BENNY L. KASS, WASHINGTON CONSULTANT, NATIONAL CONSUMER LAW CENTER

Mr. KASS. For the record, my name is Benny Kass. I am an attorney practicing here in Washington, and I represent this morning the National Consumer Law Center.

The National Consumer Law Center was funded a year ago by the Office of Economic Opportunity and is located at Boston College Law School under the directorship of Professor William Willier, who has appeared before the subcommittee on many occasions.

It is always a pleasure, Mr. Chairman, to appear before this subcommittee, for in my opinion it has perhaps the strongest record in Congress of legislative support for the consumer. Not only does this subcommittee-and its chairman-actively work for consumer legislation, but it also originates new approaches to consumer protection and gives them an early public forum, as the subcommittee is doing right now.

This morning, you are taking up yet another consumer cause: the right of individuals to deposit their money in credit unions with full assurance that it will be safe. In these 2 days of hearings, you will undoubtedly hear from many credit union experts, supporting and

discussing the concept of S. 3822, and suggesting various substantive and technical amendments. Accordingly, we do not intend to go into any detailed analysis of the legislation. We are not expert in the credit union area.

However, the National Consumer Law Center enthusiastically supports the concept of a Federal share insurance fund to be established in the U.S. Treasury. Our concern is with the so-called community credit unions, and we believe that the establishment of such an insurance fund will contribute greatly toward their economic survival.

Permit me a few moments to discuss these community credit unions. In 1964 Father Geno Baroni-now Monsignor Baroni-told CUNA's annual meeting:

The new frontier of the Credit Union Movement challenges the spirit, the ideals and all the resources of the local Credit Union Leagues, CUNA, and the Federal Bureau of Credit Unions. It means that we must give priority-of our talents, time and resources-to the poor without regard to race. We should give priority to the disadvantaged of any race or religion. Give it in trust, humility and love.

We believe in the cooperative programs rather than private profit mechanisms for social improvement that truly provide benefits to the low income population. Following this challenge, CUNA and the Office of Economic Opportunity started working toward the creation of community, lowincome credit unions. Rather than confine membership to employment-such as HEW or Senate Employees Credit Union-these community unions were organized around geographic and economic considerations.

Although they really began operating in the 1960's, today it is my understanding that there are 374 OEO-related credit unions, 107 of which are funded locally by community action agencies.

With combined assets of $4.6 million, these credit unions have at present a liquidity pool of less than half a million dollars; much of this pool is in bank deposits to handle day-to-day operations.

Here in Washington, D.C., we have, I believe, perhaps the most interesting and effective community credit unions serving nine neighborhood development programs. These nine low-income credit unions have recently organized themselves into the American Federation of Community Credit Unions, and one of its main objectives is to seek additional means to assure continued funding for these local unions. For the record, I would like to submit the annual report, the 1969 annual report, of the United Planning Organization's nine community credit unions.

Senator BENNETT. This will be received for our files. I believe it is too voluminous to put in the record.

Mr. Kass. Some of the statistics I have included in my own statement.

Senator BENNETT. All right.

Mr. KASS. We appreciate that.

It is important to note today that there are approximately 13,579 members. Compare this to just 2 years ago when there were less than 10,000. And membership, as far as we are concerned, continues to grow at rapid rates. As of April 1970, these members have savings of over $1,296,850. And this is their own money-people money, so to speak. And savings also are growing at rapid rates.

47-444-70--2

Now, what happens with this money? As of April 1970, these nine credit unions had a total of 3,376 loans outstanding, for a total of over $1 million.

Mr. Chairman, in and of itself, the statistics would be extremely impressive in the low-income areas. But when these loans are broken down into size categories, they clearly show the real impact of the lowincome credit union.

I have a number of statistics which I won't go into, but suffice it to say that in 1969, 454 loans were made between zero and $50, 799 loans were made between $51 and $100, and 519 loans were made between $101 and $150.

(A table showing the statistics referred to is printed on p. 18.)

For what purposes are these loans made? Again, without going into too many statistics, because they are spelled out very fully in the annual reports, in 1969, these nine community credit unions made 435 loans for rent, 173 for food, 296 for medical purposes, and 492 for clothing, to name but a few.

Mr. Chairman, banks in this area and probably around the country are not making loans of under $700 to $1,000. Savings and loan associations are not organized for these purposes. Who, then, services the needs of our low-income consumers who are borrowing and are showing ability to pay back their loans?

Loan sharks at exorbitant rates? We have them.

Or small loan companies at 30 to 36 percent? They are servicing the needs of these consumers also.

But, clearly, we must look to the credit union, the low-income credit union, with the reasonable rates that they are offering, to assist our

consumers.

But here in Washington-and, indeed, around the country-these community credit unions have limited assets. The dollars really go out as fast as they come in. And this is why we testify in support of a program of share-and I might add deposit-insurance. This would probably be the least expensive way for credit unions to increase their capital assets.

I personally have spoken to many leading bankers and businessmen in this community and around the country who were very willing to deposit assets in credit unions, if their assets were insured. Private institutions, labor unions, churches, and even pension funds should be encouraged to assist their local community credit union-or indeed help start one-but we must create the vehicle to insure these deposits. The Federal share insurance fund embodied in S. 3822 and the bills pending before the Congress would do just that. Accordingly, we endorse the concept of S. 3822.

To effectively assist our limited income citizens, we wish to recommend a number of amendments.

1. This committee has held hearings on S. 2146, the Community Credit Expansion Act, and S. 2259, sponsored by Senator Scott, to assist the low-income credit unions. Hearings have been held, and we support and actively encourage this committee to report the bills

out.

2. We recommend that the type of accounts which may be insured by the proposed fund be expanded to include deposits made by