WASHINGTON (8/4/08)—The Credit Union National Association (CUNA) Friday welcomed new legislation introduced by Sen. Daniel Akaka (D-Hawaii) intended to help more Americans gain access to mainstream financial services. Akaka gave credit unions the nod when introducing his bill. In a release, he noted that several credit unions have developed low-cost payday loan alternatives similar to what he proposes in the Improving Access to Mainstream Financial Institutions Act of 2008. The bill would create two grant programs within the Department of the Treasury. One is intended to provide consumers with a lower-cost, short-term alternative to payday loans by encouraging the development of affordable payday loan alternatives at mainstream financial institutions. Consumers who apply for the loans would be provided with financial education opportunities. Loans extended under the grant would be subject to the annual percentage rate promulgated by the National Credit Union Administration's (NCUA) Loan Interest Rates, currently capped at an annual percentage rate of 18%. The other program would authorize grants to help unbanked low- and moderate- income individuals establish credit union or bank accounts specifically to provide consumers with alternatives to rapid refund loans, check cashing services, and lower cost remittances. A side benefit noted by Akaka is that credit union and bank accounts provide access to savings as well as affordable borrowing opportunities. Akaka said: "About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services. With these federal resources, mainstream institutions will be better able to bank the unbanked.” Last month, Akaka signaled his interest action to protect consumers from predatory lending practices during a Senate Banking Committee hearing on monetary policy. Akaka queried Federal Reserve Chairman Ben Bernanke about what must be done to encourage the development of affordable payday loan alternatives. The Fed chairman responded that he believes competition is the best solution, but then gave the nod to credit unions: "And I think banks and credit unions--I give particular credit to credit unions. They have done some particularly good work in terms of providing remittance services to allow people to get money back to their families without exorbitant costs."