Daunting Challenges Face the CU Industry
Sweat the small stuff.
Congress won’t undertake a massive overhaul of the regulatory system during the next two years, but there will no shortage of action on lower profile issues that impact credit unions.
Here’s a summary of the issues and possible action on them. But in keeping with the fact that this is Academy Award season, this political primer comes with a twist. In addition to a discussion of the issues, there will also be suggestions of movies and actors that the issue brings to mind.
As you meet with your member of Congress and are underwhelmed, remember Democratic consultant Paul Begala’s observation that "politics is show business for ugly people."
Interchange. Like the weather, this is something that everybody will talk about, but it’s not clear that anything can be done. Though the House Financial Services Committee held a hearing on the issue–at the behest of credit unions and banks who fear lost revenue–the merchants will also make a case and also make a lot of campaign contributions. Bankers and merchants both have a lot of friends, and there is almost nothing politicians hate to do more than offend their friends. Therefore, since the issue was dealt with in the financial overhaul bill passed last year, lawmakers may punt on it.
Even if the House takes action, it’s not clear if the Democratic-controlled Senate would follow suit.
If you are trying to imagine a movie featuring a House Financial Services Committee discussion of the issue, think Tommy Lee Jones as Chairman Spencer Bacchus (R-Ala.) and Dustin Hoffman as ranking Democrat Barney Frank (D-Mass.).
Member Business Lending. CUNA’s and NAFCU’s lobbyists probably feel like Charlie Brown and the football when it comes to this issue. Every time they think they are going to get it passed–and come up with strong policy arguments–the ball gets yanked away. While both trade associations have vowed to push again this year to get the cap lifted–and they persuaded NCUA Chairman Debbie Matz to weigh in–the outlook remains murky.
While CUNA ingratiated itself with Senate Majority Leader Harry Reid (D-Nev.) by doing an independent expenditure on his behalf, the banks have been making sure their friends in high places know that they are relentlessly opposed to anything that benefits credit unions. In recent years, credit unions have had trouble winning one-on-one battles against the banks, and after this session of Congress, they may have to channel the mantra of Chicago Cubs fans: Wait ’till next year.
In light of credit unions’ close calls, based on title alone, the movie that comes to mind is To Have and Have Not. Unfortunately, there isn’t a modern day equivalent of Humphrey Bogart or Lauren Bacall in the credit union movement.
Supplemental Capital. The Senate Banking Committee actually has the issue on its oversight plan for this year, which means there is likely to be a hearing on this perennial item on the credit union wish list. But a hearing is one thing, actually passing something is quite another.
Matz has weighed in favor of capital reform, and the trade associations have come up with something of a consensus position.
Not to sound like a broken record, but the banks could be an obstacle here, too. However, if credit unions frame the issue in terms of safety and soundness, they might increase their chances.
Senate Banking Committee Chairman Tim Johnson (D-S.D.) is a quintessential laconic son of the Great Plains. If they were casting someone to play him on the big screen, Tom Hanks, a cinematic everyman, could fill the bill. The panel’s top Republican, Richard Shelby (R-Ala.), is a bit harder. Tommy Lee Jones could play him also, but since we’ve already cast him as Bacchus, that would be cutting journalistic corners. An obvious pick would be Shelby’s former colleague and well known character actor Fred Thompson.
Regulatory Flexibility. CUNA and NAFCU will both push to restore some of the items that well-managed credit unions can be exempt from. They will plead their case and ask credit union executives to do the same. But given the pro regulation tilt of the Obama administration, it’s an uphill battle. What are the chances of it actually happening? Not too likely.
In the movie version of this story, Debra Winger could play Matz, a younger Glenn Close would work as Board Member Gigi Hyland. If he were still alive, the great comic actor Danny Kaye would be a natural for NCUA Board Member Michael Fryzel.
Alas, dead men may tell no tales, but they also can’t appear in modern movies. Therefore, Kevin Spacey is this writer’s nominee for the role.
Happy lobbying, and see you at the movies.