Navy Federal Disaffiliates from Virginia League and CUNA
MERRIFIELD, Va. -- Navy Federal Credit Union has disaffiliated from the Virginia Credit Union League and CUNA in a principled protest over the League's chief lobbyist, Reggie Jones and the firm Williams Mullen, which also represents the Community Financial Services Association, the trade association for 60% of the country's payday lenders.
Senior Vice President of Planning for Navy Federal Ralph Yeatts confirmed the action, saying it was an evident conflict of interest to have credit unions represented in the Virginia General Assembly by the same person and firm that also forwarded the interests of payday lenders. "We see it as contradictory to share a lobbyist that puts forward the cause of payday lenders. We think it trivializes the credit union difference and demeans credit union philosophy. It's simply incompatible to be represented by a lobbyist who is also the chief spokesman for the payday lending industry."
Jones' 27-year relationship with the VCUL and efforts on behalf of the CFSA were revealed in Credit Union Times in a Sept. 19th story about Virginians Against Payday Loans (VAPL), an anti-payday lending grassroots organization that sought to combine efforts with the league.
VCUL CEO Rick Pillow said that Navy FCU President Cutler Dawson first telephoned him in mid-October to complain about the dual relationship. "I respect Cutler's principled stand on this, and know that the league's credit union members may not agree with us on every decision we make. Good people can respectfully disagree from time to time. But we have to look at the broader issues that affect all Virginia credit unions."
Pillow said the VCUL Board had taken bold steps to resolve the issue to everyone's satisfaction and he hoped that Navy would re-affiliate when those changes are made. But timing is everything. Pillow said that the General Assembly was considering several bills that were of vital interest to all the state's CUs, and in particular, state charter CUs. A pending CUSO regulation out for comment that would be problematic for CUs will have a hearing; a bill on CU's taking public deposits, another on unclaimed property and possible CU parity with banks all require the deft skill of an experienced lobbyist, he said.
"Our Board met on this and we had detailed discussions; in the end, we agreed we shouldn't have a lobbyist that also represents a payday lending association. We spoke with Williams Mullen about it as well. This issue will be settled right after the Assembly's 2008 veto session in April sometime and we'll make sure our lobbyist doesn't represent payday lenders. But we need to focus on these pending issues so we can't sever our relationship right now." Pillow noted that there are also contractual obligations that might complicate taking such action.
Navy's dues to the league are $24,000 and its CUNA dues are approximately $210,000, according to the formula used. A spokesman described the dues as "significant". CUNA President Dan Mica said in a statement to Credit Union Times, "We are obviously disappointed that this dispute between two of our valued members and leaders of the credit union system -- Navy Federal Credit Union and the Virginia league -- has come to this point. Both organizations have principled positions, but they disagree on how most effectively to deal with the scourge of predatory payday lending. That includes particular strategies and personnel who execute them. CUNA, and a number of other parties, have attempted to mediate these differences over the past several weeks. To date, we have been unable to find the key to resolving the issues -- but CUNA will continue to work with both parties for a solution."
"We must be clear about one thing: Predatory payday lending will never have a place within the credit union movement -- and credit unions are working together toward its eradication," Mica said. He cited the National Credit Union Foundation's REAL Solutions payday lending program. He lamented the conflict coming at a time when bankers have concluded the unification of two of their largest trade associations, while "we seem to be magnifying our differences."