After Historic Election, True Policymaking Begins
We're coming off the heels of a historic election. Not only will President-elect Barack Obama serve as the first African-American president of the United States after a landslide victory, but he will inherit an economy like no other seen in the last several decades.
This is a bull the Obama administration will have to commandingly grab by the horns to have any chance of lasting eight years. And credit unions will be along for the ride, lending money prudently just as they always have, while others who haven't can't. Certainly we will lose some credit unions (and already have) to this economic fiasco, whether they were mismanaged or just victims of circumstance. Policymakers in Washington top to bottom are well-advised to keep credit unions' responsible stewardship in mind as they decide their next moves to straighten out the erratic path the nation's financial sector is taking right now and avoid so-called "unintended consequences."
Not only do credit unions work for the good of their 90 million members, who are also the constituents of the elected politicians, but they are also politically active and aware.
While this year's presidential election was highly notable for several reasons, the credit union trade associations don't pay as much attention to the presidential election as they do individual congressional seats. When it comes down to it, unless a presidential candidate really wants to tax credit unions or, say, consolidate the regulatory agencies as was raised this year, members of Congress generally have more dealings with and a greater impact on credit unions than the president. They're also more accessible as credit union members, executives and lobbyists become bigger fish in a smaller pond.
The credit union community showed the strength of its political muscle winning the vast majority of the congressional races it was involved in. In particular, CUNA won one of the three seats it had put more than $400,000 combined in independent expenditures into. Independent expenditures aren't for the faint-of-heart as they are typically used to put your candidate over the edge in a tight race. These races are tough and one out of three ain't bad (to borrow from Meat Loaf).
Credit union lobbyists from CUNA, NAFCU and the Pennsylvania Credit Union Association also came out in force for long-time friend Paul Kanjorski, whose seat was in question, as well as a grassroots network. CULAC also made its most substantial foray yet into partisan expenditures for this race that was so worthwhile for credit unions, in addition to the maximum $10,000 each CULAC and NAFCU/PAC gave to his campaign.
Kanjorski has always been a rock-solid supporter of credit unions and now that he has been the second in command on the House Financial Services Committee for the last couple years, he is in a strong position to help credit unions.
He has been the lead Democratic CURIA co-sponsor from the start and was instrumental in pushing H.R. 1151 through 10 years ago.
Financial Services Committee Chairman Barney Frank is also fond of credit unions and enjoys their political support. He has publicly promised CUNA President/CEO Dan Mica, his former colleague, that credit unions will not lose their independent regulator.
However, Frank is also a strong proponent of Community Reinvestment Act expansion. Credit unions tend to not look favorably on being forced to comply with CRA; many argue that they already do the work in the field but don't want to be saddled with the time, staff and expenses of paper-pushing. Banks can even earn CRA credit by putting money into community development credit unions, which one might think would be evidence enough of these credit unions' dedication to serving the underserved.
I couldn't find any reliable information clearly stating Obama's position specifically on CRA, but with a Democrat who has a background as a community organizer, Frank will likely have a friend in the White House on the issue. The battle is by no means a lost cause, and the credit union trade associations are not ones to give up the fight on a matter that could be such a drain on credit union resources.
Another issue that credit unions should be paying close attention to under the upcoming Democratic trifecta (White House-Senate-House) is mortgage cramdowns in bankruptcy filings that allow judges to amend mortgage terms. Even credit unions that used reliable appraisers for their mortgage loans could be affected by this proposal should it come to be. In areas where home values have plummeted, credit unions will find the appraisals are not worth the paper they're written on. This could hurt bottom lines nationwide but also increase the cost of mortgages for borrowers as lenders factor in the uncertainty of terms down the road.
Credit unions are known for working with their borrowers, but how many don't return calls from lenders after missed payments, whether out of pride, shame or fraud? Many will file bankruptcy before you've even had a chance to talk to them. Being proactive in contacting members to get to the bottom of why payments were missed can better position credit unions to avoid delinquencies or possibly even member bankruptcy filings. Compassion and counseling is the one-two punch here.
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