We can all breathe a sigh of relief that the elections are finally over. The campaign sniping on the television and the intrusive robo-calling is done. Now, we have to get down to what it all means for credit unions.
The Massachusetts Credit Union League made the somewhat controversial choice of backing Elizabeth Warren, mother of the Consumer Financial Protection Bureau, in her successful campaign for the Senate. Not only did she win, but she also highlighted her support of credit unions during her acceptance speech. She included her “love” for credit unions among a list of key supporters, adding, “All of you have my back, and I promise you, I’ll have your back.”
How that translates into action will be interesting to say the least. I have no doubt she sees credit unions in her state as strong allies and the good guys that got caught up in the fixes created for the less-than-savory dealings of the larger, more aggressive financial services providers. However, her long and significant background indicates her strong support of consumer protectionism above all else.
Yes, credit unions are for the consumer, but there are a laundry list of unintended consequences stemming from legislation and regulatory implementation. For example, while credit unions in aggregate are not a systemic threat to the American financial system, they are caught up in Dodd-Frank requirements and CFPB’s codifying regulations that only further add to the burden of doing business as a financial institution. The mortgage servicing and wire transfer rules are prime examples, just to name a couple. On the APR piece of the mortgage servicing reg, credit unions are particularly stifled because of their statutory interest rate cap.
On top of that, there are the costs of retraining staff, reprinting documentation, and – above all – retraining consumers on how to look at it. This regulatory change will create greater consumer confusion rather than clarity. The regulators often don’t recognize this last part because they are not the ones facing them every day and tasked with explaining that the credit union didn’t change its rates, but Washington changed the way they are calculated.
The question is whether Warren would fight to exempt credit unions from these problems and others that will inevitably arise from government “fixes” to what ails the financial services industry and plagues the U.S. economy. What does having credit unions’ back mean? Will she oppose CRA for credit unions if it comes up? Credit unions in her state are pretty tolerant of it but much less so nationwide where credit unions are not subject to it. Will she vigorously defend the credit union tax exemption in the face of Democrats’ desperate scramble for new revenues? Republicans blocked her appointment to head up the CFPB, so how well will she forgive and forget. Maybe she will support credit unions in their battle against the bankers, who were particularly harsh toward her during the campaign season, but credit unions have had the support of many other more senior senators and not gotten it done in a decade.
Warren’s opponent for the Senate seat, incumbent Sen. Scott Brown, who previously received funds from credit unions, also voted against delaying the implementation of the interchange rules under Dodd-Frank. As I wrote in a column back in August, “Neither is a good pick and given Massachusetts’ penchant for blue, the league made the best choice it could have. When Warren wins, hopefully she remembers who helped bring her there.”
The PACs of CUNA and NAFCU continued their streak of strong electoral wins, each claiming victory in more than 90% of the campaigns they were involved in. Particularly of interest, CUNA helped get three challengers elected to the House. These gambles should be high-reward ventures for the great risk they took in potentially alienating the incumbent party. In addition, CUNA backed 50 races where there were no incumbents and won 44. These seats, too, should reap strong supporters.
But what I find most interesting is the groundwork that the Maine Credit Union League, and no doubt others, is laying. The league reported four of six wins in the state legislature for credit union volunteers. That figure is outstanding and crucial grassroots work every league should aspire to. The credit union winners for re-election were Rep. Michael Lajoie, chair at Lewiston Municipal FCU; Rep. Ken Fredette, board member at Sebasticook Valley FCU; Rep. Jeffrey Gifford, board member at Lincoln Maine FCU; and Rep. Ray Wallace, a member of supervisory committee at Maine Highlands FCU. Congratulations to them and may more follow in your footsteps.