Capitol Hill Insiders will tell you all about the nasty side of politics. Why some seemingly good-intentioned bills fail right from the start or why some shady amendments are inexplicably added in the eleventh hour often comes down to politics.
Credit union trade associations have fortunately become chock full of Capitol Hill insiders who know the way the system works. Everyone knows that playing politics is about much more than doing what's right, you have to look two, 10 or 20 steps down the road for how what you do today will affect what happens in the future. You have to determine how things will be perceived by various special interest groups, and key leaders of Congress. You have to know about committees and jurisdiction. It's exhausting!
Just recently CUNA took a major stand with the reg relief bill that could have all sorts of consequences or maybe none when it all shakes out. CUNA decided, very late in the game, to state its opposition to reg relief if the cap on thrift commercial lending was removed. Currently thrift commercial lending is capped at 20% of assets, an enviable level for CUs, which are capped at 12.25%.
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Dare I say about three years ago CUNA probably wouldn't have done what it did. Because three years ago the issue of credit unions converting to banks was still a sleeping giant. But no more, it's now an ugly blemish on a cooperative industry.
CUNA obviously made this move to try and make the thrift charter less attractive for those credit unions that might be contemplating conversion.
CUNA's actions were a bombshell in the bank/CU lobbying world. There were nasty threats by banker trade association leaders to credit union leaders that now the gloves were off. How dare CUNA try this last minute stunt? Threats were flying all over the place, with the message being that now bankers were really going to come after credit unions.
What a joke. The gloves are now off? How can bankers do much more than they've already done? They're suing credit unions on the federal and state level, lobbying Congress to contain credit unions, painting credit unions as not being the "white hats" everyone thinks they are, and on and on. You can't punch someone in the gut 50 times and then threaten to sock them one more time if they're not careful-the damage is already done. Banker trade association threats like these should concern no credit union trade association leader. The day Dan Mica or Fred Becker cower to banker threats is the day the industry is in real trouble. Fortunately neither leader is the type to be threatened by bankers.
If banks and credit unions had a much better relationship, what CUNA did would truly be a bombshell, but not in today's hostile environment.
Here's my take. Think back to the Credit Union Membership Access Act, which the industry desperately needed to pass. It was the ultimate battle for credit unions. The industry was slapped down by the Supreme Court and its future was pretty much in the hands of that bill. In hindsight, there was one glaring problem with that bill. It significantly weakened the voting requirements for credit unions converting to banks-it made it much easier to do so. Once credit unions started converting, critics said, "See, we didn't get as good a deal with the Credit Union Membership Access Act as you thought." That's a Monday morning quarterback approach. Who could have known back then that credit union CEOs and board members would start seeing dollar signs and sell out the members? With the threat of field of membership containment, the voting requirements for converting a credit union were the last thing credit union lobbyists were worried about.
Fast forward to today and CUNA's move, a move that some say (I doubt it) could potentially kill the entire reg relief bill, and you have to give CUNA credit. We now know conversions are a problem, so anything that is going to potentially make the problem worse should be opposed. Let's start worrying about the laws and rules that really matter. Sure reg relief contains a few good things for credit unions (though I bet most credit union leaders couldn't name three positives from it), but it's not a home run bill for credit unions. It's not the Credit Union Regulatory Improvements Act which eases the business lending cap and implements risk-based capital. Those are the kinds of provisions you don't want to see killed and go to the mat for. Are the things in reg relief so important for credit unions that the credit union lobby should let the thrift charter become even more attractive? Does the credit union lobby want to look back five years from now and second guess letting the thrift cap on business lending be wiped away? No way! Kudos to CUNA. It went on the offensive, it took a stand for the credit union charter by trying to lessen the thrift charter. It's not ideal. It's not pretty. It's politics. -Comments? E-mail [email protected]
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