LOCKPORT, N.Y.–A former 14-term congressman who was highly involved in financial services issues and credit union legislation—the ramifications of which continue to be felt—has died.
John J. LaFalce, a Democrat from western New York who passed away at age 85, was best known to many for his efforts related to the Love Canal toxic materials clean-up and recovery, spent 28 years on Capitol Hill, including as chair of the Small Business Committee, from 1987 to 1995, and as the ranking Democrat on the Committee on Banking (now the Financial Services Committee). He was pivotal to the passage of two far-reaching bills: the Gramm-Leach-Bliley Act of 1999 (officially known as the Financial Services Act), which eliminated legal boundaries between investment banking and commercial banking, and, in 2002, the Sarbanes-Oxley Act, which targeted corporate financial fraud.
He was also active in credit union legislation, including pushing for passage of the Credit Union Membership Access Act in 1998 and later for backing a bill that divided CUs and was strongly opposed by state charters.
Bitter Pill Swallowed
To get the Credit Union Membership Act through Congress, credit unions swallowed a limit member business lending that they continue to fight 25 years later. In 2002, LaFalce introduced the Federal Credit Union Service Expansion Act of 2002 (H.R. 5621), which had some support from credit unions but which was opposed by the National Association of State Credit Union Supervisors, which argued that the best way to strengthen the federal charter was not to curtail powers of state-charters, as LaFalce’s bill would have done.
The bill was introduced at a time many federal charters were moving to state charters due to the new federal limits.
The legislation would have, among other things, prohibited a state-chartered insured credit union from including any person or organization within its membership that is not a permissible member for a federal credit union, or to engage in any activity, or exercise any asset power, that is not authorized for a federal credit unions.
One NASCUS spokesperson said at the time, “The bill needs surgery to cut out the cancerous parts.”
The legislation, ultimately, did not pass.
An Accidental Forecast
LaFalce would also prove to have great foresight into some history that would go on to repeat itself.
Prior to the collapse of the nation’s savings and loan industry in the late 1980s, LaFalce was strongly critical of so-called subprime homeowner loans and payday loans by companies he said preyed on consumers. Subprime mortgages, of course, would come back to play a role in the housing crisis of 2008-09 and the market crash that followed.
