Caucus Casts CU Spotlight, but Is It Bright Enough?
It was nice to see that NAFCU had an uptick in attendance from last year, 331 in 2009 versus 312. It was great to see that credit unions obviously still find this event crucial to their futures because it is. But it is not enough. Hundreds are not enough credit union executives to make the points that need to be made.
The thousands CUNA's GAC brought in earlier this year was impressive, but it's not enough. There are too many vital things going in on Washington right now for credit unions to remain at home.
I harp on political involvement a lot, and I will continue to harp on it until every credit union makes it a point to meet with its representative and senators to discuss credit union issues. Whether they agreed with credit unions or not, the members of Congress that appeared at caucus seemed well-educated on the issues important to credit unions, from the Consumer Financial Protection Agency to interchange fees to member business loans.
However, some didn't know or didn't care, about the impact on credit unions, which I believe they nearly all said didn't create the problem. Gigi Hyland pointed out that credit unions could face the "untenable" scenario of three separate examinations: by a state regulator, the NCUA and the CFPA. She said the NCUA would work to keep that from becoming a reality.
In a memo from House Financial Services Committee Chairman Barney Frank, the NCUA was included on an advisory council under the CFPA. What's amazing to me is that it took months for the agency-which admittedly isn't that large in the scheme of things-to get included. The NCUA and credit unions are often an afterthought, paid short shrift by most in Washington.
Credit unions, the financial services actors that were lending responsibly and treating members fairly, should find it downright insulting. Despite the recognition from some key players, there is no general recognition, just as the general public couldn't explain what a credit union is even though 90 million are members.
Frank is one of those members of Congress who has lauded credit unions' services, but this is mere lip service. If credit unions are such beacons of consumer service (and I would argue of advocacy as well), then carve them out of the CFPA. Leave them alone when it comes to CRA. Imposing such regulatory burden will only stifle their efforts.
Large credit unions should pay for trips to D.C. for smaller credit union representatives who otherwise would not be able to attend events like the caucus or GAC. It would be to all credit unions' benefit.
While large showings in Washington leave a definite impression on members of Congress, meeting your representatives in your home district is crucial, too. Every credit union needs a designated lobbyist, such as the CEO or business development specialist, who visits with their representative at least once a quarter.
The NCUA should also be the target of your lobbying efforts. While efforts on the Hill may seem a bit daunting, the regulatory level is another place where credit unions can have a solid impact.
For example, the NCUA Board last week issued its 15-basis-point premium assessment. The assessment was necessary to help recapitalize the NCUSIF after its corporate stabilization efforts. The future of the corporates, and the assessments themselves, are two areas where credit unions can definitely have an influence.
In particular in speaking with people at the caucus, next year will be harder on the NCUSIF, and it won't necessarily be because of the corporate credit unions. At least half a dozen very large credit unions are on the brink of disaster. Field of membership restrictions and weaker financials generally among credit unions are hampering merger efforts.
What's absurd about the law is that the NCUA can't merge an ailing credit union with a healthier one that doesn't have a similar field of membership until the credit union has actually dipped below 2% capital. This nonsensical requirement only serves to inflict more damage on the surviving credit union, the NCUA, and the attitudes of the failing credit union's members.
Even if the NCUA uses its authority for an emergency merger, money from the insurance fund will have to be ponied up to sweeten the deal.
Take Huron River. The NCUA as conservator is trying to collect on loans-after giving away the good stuff to Detroit Edison CU-the credit union could not legally make to begin with. This is just a layman's perspective, but if the initial action was illegal, then the entire contract should be null and void. A hired hit man can't sue his employer for nonpayment because the initial agreement was illegal.
Suing the federal government is always a tricky issue, but the American Bankers Association has been successful.
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