Divided Government May Provide Opportunities for CUs
Is gridlock good? Is government that's divided, devilish or divine?
Thanks to the voters' decisions earlier this month, after a two-year hiatus we will be able to find out.
For credit unions, the new bipartisan environment may help them make their legislative dreams come true.
They will, however, have to do more than wish upon a star.
Divided government often causes Congress to pass centrist policies that enjoy support on both sides of the aisle. Positions and personalities on the extreme left and extreme right may be marginalized. Given that the voters have continually shown themselves to be centrists, that might result in Congress doing things more in line with public sentiment.
Most items on the credit union wish list, especially raising the cap on member business lending and reforming capital rules, fall into that category. In addition, the bipartisan nature of the money-giving by CUNA and NAFCU has left the industry with friends in high places on both sides of the aisle.
Raising the MBL cap has already been endorsed by the Obama administration, Senate Majority Leader Harry Reid (whom CUNA spent more than six figures helping get re-elected) and key Republicans like Rep. Ed Royce (R-Calif.). It seems like one of those bills that ought to have little trouble getting fast tracked.
Alas, nothing is that easy.
For starters, while credit unions have increased their political involvement, so have the banks. The bankers have also worked both sides of the aisle in part to stop the credit union agenda at every turn. And if past is prologue, the bankers will try to throw their weight around again.
Banks have managed to create this image of the friendly neighborhood financial institution, yet the community banks have often worked closely with the big banks to remain a potent lobbying force.
But credit unions can take heart. Spending the most money and walking around with a swagger doesn't always ensure victory.
Just ask the New York Yankees.
They were humiliated by the Texas Rangers in the second round of post-season play this year, even though their payroll was more than four times as large, $206 million to $55 million.
To counter the work of the bankers, CUNA and NAFCU are following up on their political activism by busily meeting with new members to educate them about the virtues of credit unions and thus lay the groundwork for future action.
Some of those sessions are likely to be easier than others.
Take Republican Congressman-elect Lou Barletta. He defeated credit union supporter Rep. Paul Kanjorski (D-Pa.) despite strong efforts on Kanjorski's behalf by the trades.
Credit unions weren't an issue in the race and several lobbyists for credit unions said Barletta-who stressed the need for job growth efforts-was never particularly hostile toward credit unions.
One can envision CUNA and NAFCU and their member credit unions in Northeastern Pennsylvania holding a get-acquainted session with Barletta and maybe even giving him a campaign contribution.
And what if Barletta or his aides bring up the delicate subject of the trades' work for Kanjorski?
That will certainly test the ability of CUNA Senior Vice President John Magill or NAFCU Executive Vice President Dan Berger to be diplomatic. Maybe they will channel that master of interpersonal skills Michael Corleone and give a variation of: "It's not personal, it's just business."
On capital reform, CUNA, NAFCU and NASCUS have been working for several years to educate lawmakers on the need to let credit unions accept additional capital. While this would change the nature of credit unions, it might help several of them get on stronger financial footing.
Lawmakers might be receptive to the idea as well, especially as part of a broader capital reform package. Credit unions might be able to slide in under the radar screen.
Credit unions have done well with divided government. The most important credit union legislation of the past generation, the Credit Union Membership Access Act (H.R. 1151), reversed a U.S. Supreme Court decision and gave credit unions broad authority to expand their memberships.
The bill, which was strongly opposed by the banking community, limited the new community charters for credit unions to well-defined "local" communities. It gave NCUA the power to define what such a community is and what constitutes an "immediate family member" for purposes of membership eligibility.
At the time it passed in the summer of 1998, both chambers of Congress were controlled by Republicans and at the other end of Pennsylvania Avenue, Democrat Bill Clinton occupied the Oval Office.
Credit unions haven't had a major legislative victory since then.
It's a good thing that credit unions know how to survive and thrive politically with divided government, because that has been the case for 13-and-a-half of the last 22 years.
Divided government often means that while politicians stick to their core principles, they have to negotiate more to achieve their goals.
Or, as the late Senate Republican Leader Everett McKinley Dirksen famously said: "I am a man of fixed and unbending principles, the first of which is to be flexible at all times."