Election Year Political Support Prompts Industry Discord
Credit union consultant, blogger and Capitol Hill veteran Marvin Umholtz said the nation’s growing political divide is apparent among credit union leaders and fuels comments he receives from his readers and colleagues. Umholtz, who said he isn’t affiliated with either major party, blames Democrats and the Consumer Financial Protection Bureau for turning credit union leaders against progressive candidates. Umholtz said the Massachusetts Credit Union League’s July 26 endorsement of Democrat Elizabeth Warren for U.S. Senate was particularly distasteful to credit unions, given her history with the CFPB.
“In my mind, Elizabeth Warren fits the category of a candidate who did damage to credit unions even worse than Durbin,” Umholtz said. The Olympia, Wash.-based consultant admitted his dislike of the CFPB and the Dodd-Frank Act may be extreme, but the bureau’s new rules that were mandated by Dodd-Frank have done so much damage to the credit union business model, Umholtz said, that nobody who supported or voted for the bill should receive any credit union support this election season.
“That no support group includes many more Democrats than Republicans because of the highly partisan vote in 2010,” Umholtz said.
David Proffitt, president/CEO of the $180 million Alcoa Tenn Federal Credit Union, agreed with Umholtz, saying he was stunned the league endorsed Warren and questioned the logic of the pick.
“To endorse the creator of the massive regulatory bureau is contradictory to the credit union mission of creating and sustaining a financial cooperative with our members’ money,” Proffitt said.
Massachusetts League Senior Vice President of Public Relations Robert Kimmett said the organization has received some criticism from members for the endorsement but said, by and large, it was a positive move. League endorsements are nonpartisan, he said.
“The only interest we take when approaching governmental and political matters is whether or not the individual running for office is pro-credit union,” he said.
The league hasn’t heard an earful from members who say the CFPB is out to make life hard for credit unions. Warren is a member of Harvard Credit Union and her pro-credit union stance goes a long way, he added.
Virginia Credit Union League President/CEO Rick Pillow said both major political parties bring a different type of support to credit unions, but at the end of the day, it’s a candidate’s individual record that earns him or her an endorsement or PAC contribution.
“Sometimes you’re better off on the regulatory side with Republicans because they tend to want less government,” Pillow said. “But on the other hand, Democrats tend to be better with proactive issues. For example, there are more Democratic sponsors for member business lending.”
The Virginia league endorsed Democrat and former governor Tim Kaine in his bid for the U.S. Senate after endorsing his opponent in 2006, Republican George Allen, who also served as the state’s governor and completed one term as a senator. Pillow said the league organized a task force to select a candidate in the 2012 race, and the group met with both men, asking questions about current credit union issues. Though both candidates are friendly to credit unions, Pillow said Kaine “hit the ball out of the park” with his responses.
Pillow said the Virginia league has been receiving a little more feedback than usual from members who disapprove of supporting a candidate on the basis of political party. But, he said, the league encourages credit union leaders to become involved with any candidate’s campaign regardless of party to ensure both sides understand industry issues.
CUNA has also been receiving feedback regarding league endorsements and PAC donations that reflect the political divide, said President/CEO Bill Cheney. Feedback has been both positive and negative, and has included criticism and endorsements of both parties.
“However, most Americans just want solutions that are good for the country, and we want solutions that are good for credit unions,” he said.
CUNA doesn’t consider party affiliation when spending PAC funds, Cheney said. In fact, according to opensecrets.com, a website that tracks PAC donations, of the $1.67 million CULAC has spent on candidates during this election season, 51% has gone to Republicans while 48% has been donated to Democratic campaigns.
Cheney said CUNA doesn’t give or deny support based on just one issue. For example, Sen. Mark Udall (D-Colo.), who is the primary sponsor of member business lending bill S. 2231, hasn’t marched in step with all points of the credit union agenda, and he’s only a freshman senator.
“But, there’s no reason to think that he wouldn’t be a credit union friend,” he said.
NAFCU President/CEO Fred Becker called the business of supporting a member of Congress a balance test because an elected official may support one piece of credit union legislation but not another. Although NAFCU’s PAC has contributed more to Republicans than Democrats so far this year, the blue team came out ahead in NAFCU contributions in 2008.
“The big exception is interchange–you won’t find anybody who got money from us that voted against us on interchange,” Becker said. “They say time heals all wounds, but that wound remains open.”
Umholtz disagreed with trade association leaders that party doesn’t matter to credit unions. The fate of the nation’s economic recovery, the reduction or increase of regulatory burden and the renewal of consumer confidence that leads to economic recovery are more important to credit unions than a candidate’s enthusiasm for credit union legislation, he said.
“I don’t see the Democratic Party delivering that with its current policy direction,” Umholtz said. “We also don’t know what the Republicans would deliver if in the complete majority but can it possibly be worse than what we have now?”