NAFCU was against the pilot, and I criticized it for not seeing the bigger political picture. NAFCU was more concerned with jurisdiction of certain congressional committees and Thomas' impending retirement. That was shortsighted and didn't address the greater problem–bankers were gaining traction with Congress on wanting to see proof for the justification of the tax-exemption.

Fortunately, CUNA supported the pilot, understanding that credit unions were sooner or later going to have to give Congress hard data or continue to face this banker attack for years to come. Mind you, I don't think you jump because the bankers say so, but once the banker argument starts to resonate with Congress, then you have to move. That's exactly what happened with the pilot.

But CUNA is the one that now has me scratching my head wondering what in the world its leadership is thinking. As many may know, CUNA is attempting to define "modest means"–the very phrase that the bankers have been throwing in the face of credit unions for years. Bankers say those of "modest means" are who Congress intended credit unions to serve and once they go beyond that they are "expansive" and the tax-exemption is no longer justified.

One of the definitions being bandied about by CUNA is that modest means would encompass those at 120% of median income, which by the way would be a very high percentage of Americans, in the neighborhood of 70%. Is that really a definition? Talk about broad.

That's not set in stone, and CUNA may in fact come up with a much better formula or a much worse one, but forget the formula–why do it? Why put defined edges around something like this? CUNA says it wants to define it before the bankers do it so credit unions dictate their future and not the bankers. I can see that point, and I like it. We've seen the credit union industry be forced into too many things because of banker lawsuits. The most egregious recent example is the changing of the underserved area regulation.

But on this one CUNA isn't seeing the bigger political picture. Unlike the data collection pilot, members of Congress are not pushing for a modest means definition. If Congress doesn't want it, don't give it to them. Also, not even the banking industry with its Community Reinvestment Act obligations have been able to define this type of thing–the so-called modest means or underserved segment.

Once you sharpen the lines and put a definition out there, you're boxing yourself in. If you make it so broad as the 120% example, you're not going to get anywhere politically. It seems like a fruitless exercise that has very little upside.

Worse, banks can take the same definition and make their numbers dance and use it to show how they are better than credit unions at serving those of "modest means."

It's also bad because defining it means CUNA in some ways agrees with bankers that credit unions should predominantly be serving those of modest means. Any member of Congress with any lick of business sense knows that credit unions couldn't survive just serving any one segment, including people of "modest means."

Credit union CEOs should start calling, sending e-mails and writing letters to Dan Mica urging him to pull back on this one. Mica is a big enough leader and person to turn the boat around if that's what the members want. And I would be shocked if the majority of CUNA members want a definition of "modest means."

Also, doing something because you believe the bankers will do it is still letting the bankers dictate policy. The bottom line, if Congress isn't asking for it, don't do it!

Back to the data collection pilot. Once the results are out, it's going to be an opportunity for the credit union industry to right a wrong with the new underserved area adoption rules. Currently, only multiple common bond credit unions can adopt underserved areas. Ludicrous! And the NCUA Board knows it, but they were bound by statute. Rodney Hood's opposition of the passage of the rule and his public comments at the board meeting were a great way to get out NCUA's frustration with the rule change. As Hood said back then, "I'm disappointed that the bank trade groups have put the agency in the position to have to limit service to the undeserved." I think Hood's no vote was part of a coordinated effort among all the board members to give Hood an opportunity to state the obvious.

If the results of the pilot are positive, credit unions win and Hood's on-record comments ring true. Then it's time for CUNA and NAFCU to get back on the same page and go to Congress and get the underserved area debacle fixed. If the results are mixed, the opportunity is still there to get it fixed. If the results are bad, well I think they should…why even go there, the results won't be bad.

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