Moving the Needle on Reg Relief
When CUNA President/CEO Jim Nussle implored more than 5,000 credit union professionals at the GAC last week in Washington to go on the offense over the expected epic fight for regulatory relief, he knew he was speaking to the choir.
Nevertheless, Nussle hopes he gave them something to think about when they returned home. It's his hope that those credit union professionals will remember his call to action, and in turn, will motivate thousands more to join the credit union cause.
While it's uncertain whether Nussle's message will drive credit union professionals to action, Washington insiders said credit union leaders have more power to influence their congressional representatives than they may realize.
Barry Jackson, called by the national media as one of the most influential figures in Washington and a force in Republican politics for more than 20 years, participated in a GAC panel discussion about the expectations of the Trump administration, which is planning to give businesses regulatory relief.
“Let me tell you just from the get go. I have been doing this since 1991 and I will tell you there is no entity that has more credibility and has more power to move the needle on financial services issues than credit unions,” said Jackson, who served as chief of staff for former House Speaker John Boehner and worked as an assistant strategic advisor to President George W. Bush. “It's just a fact. Everyone likes to talk about Jamie Dimon and JP Morgan and Goldman and that's all great. But the power that you guys have is remarkable.”
Jackson recalled being in the Roosevelt room in the White House sitting across the table from former U.S. Treasurer Hank Paulson in 2008 to discuss ways to address the financial crisis and to prevent millions of Americans from making a run on their banks.
Paulson recommended that the FDIC increase its insurance threshold to insure bank accounts from $100,000 to $250,000. Jackson noticed, however, that Paulson didn't recommend the same thing for credit unions.
“If the idea is to keep the regular Joe from taking his money out, why would you increase the insured accounts for the FDIC and leave the credit unions out?” Jackson asked Paulson. “We just got into this answer that well, you know, the real money is over here [at the banks] and this and that.”
“Well, OK, you do know we are going to have to do this because there is nobody more powerful, so we can either roll out with our [FDIC] plan and let the credit unions beat us to a pulp and win, or we can roll out a plan like we’re supposed to and be a hero to credit unions,” Jackson said during the meeting. “It is entirely up to you.”
Jackson noted that credit unions hold the power because they have the votes at home.
Former U.S. Democratic Senator Mark Begich of Alaska, who is a member of three credit unions, agreed with Jackson during the standing-room only GAC panel discussion about the Trump administration's expectations.
“When credit unions do their visits to Capitol Hill they may get discouraged because they are only meeting with staff, and they may wonder if it was worth it,” Begich said. “Let me just tell you it doesn't matter who you meet with, it is worth it because if they don't hear from you, it's out of sight out of mind. When you walk in, you represent thousands of people from your state or your community. That is a powerful tool, and the elected officials take note of that. They understand that.”
Nussle is rallying the credit union troops to launch a focused and concerted offense campaign for common sense regulations and against the “one-size-fits all” regulation system created by Dodd-Frank and the CFPB.
“Each and every member that walks through your door feels the difference as a result of what happened from Dodd-Frank,” Nussle said. “Some of it might have been right, some of it may have been very well placed, but quite a bit of it was to cover somebody else's behind.”
Gerry Agnes, president/CEO of the $1.7 billion Elevations Credit Union in Boulder, Colo., who also serves on a CUNA subcommittee for regulatory relief, said even though the CFPB does not supervise credit unions, the federal agency still has a huge impact on credit unions.
For example, the ability to repay mortgage regulations and the full disclosure rules that includes three-day waiting period requirements is hurting consumers and financial institutions.
“The ability to repay rules are a great concept but the ability to repay has disqualified some borrowers that otherwise could have qualified,” Agnes said. He also indicated there have been unintended consequences from new full disclosure rules, including the three-day waiting period that has not necessarily benefitted consumers.
Elevations is the largest residential lender in its primary market, Boulder and Broomfield counties. The credit union also expanded its mortgage business into the Denver and Fort Collins markets.
Moreover, Agnes took issue with the much maligned Durbin amendment.
“The Durbin amendment, ironically, weakened federally insured financial institutions because it exported future capital from the interchange fees and gave it to retailers to benefit the consumers,” Agnes said. “The reasoning behind it is that retailers promised to pass on the savings to consumers. I am a consumer, so I’ll speak for myself, I haven't felt it, have you?”
On top of all that, Agnes pointed out, is that credit unions have shouldered the hard costs and reputational risks of massive debit and credit card breaches that originated from retailers.
“What should happen is that merchants must be held to the same level of accountability for protecting consumer data as financial institutions are,” he said. “That is a regulatory burden that we have that they don't. And we bear not only the hard dollar costs to reissue credit and debit cards, but we also have the reputational risks around their breaches, and that to me needs to be corrected.”
With more than 58,000 board members, 273,000 credit union professionals and 105 million members, Nussle pointed out that the industry has the numbers to win the regulatory relief fight.
More than 400 credit unions are participating in a members’ activation program to educate members about the credit union difference and the main issues that affect the credit union industry.
If all 400 credit unions ramp up their programs, the industry could expect to leverage more than 20 million advocates, which would be more advocates than the AARP or the NRA, according to Nussle.
“If we are going to have any chance in winning we are going to have to engage members,” Nussle said.
He noted that because members trust credit union professionals, they have the best opportunities to get members involved.
“I need you in this fight. I need you to think about this. We have a chance this year like never before, but only if you tell your story, if you teach it to everyone that is not only here but everyone back home,” Nussle said.