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It is easy to become disenchanted with the political process. Scandal after scandal and tales of campaign finance abuse make politics appear to be a nasty game that only the insiders can play. While that is true to some extent, credit unions can’t fall into that trap. With all due respect to CUNA and NAFCU, credit unions can’t leave it solely in their hands to make their case with members of Congress. Politics is first and foremost a local game and lobbying has to start at home for it to have a big effect on Capitol Hill. Some credit unions, which are either unhappy with their trade association representation or who just want to do more on their own, have even started political action committees. They offer dress down days, hold picnics and offer other fun events to raise money from members and employees. They are not going to raise millions, and they don’t have to! The PACs do two things. They help build awareness among members and employees, those who have the most at stake in the credit union, that yes credit unions do have political challenges. Second, they help a credit union make its mark with members of Congress. Wescom CU and Affinity FCU for example are two CUs that have been able to engineer successful PACs. But beware, adding a PAC will add to your compliance burden. Quarterly reporting is required and political giving is still under the microscope so credit unions have to know what they’re getting into. Some credit union lobbyists are against individual CU PACs because they think it creates too many players and could cause a disjointed message. League lobbyists will also tell you they are unnecessary because if a credit union wants to give money to lawmakers in their district, the league can get them the money and let the local CUs make the donation. I think if a credit union has the wherewithal to create a PAC and feels strongly enough about it, they should do it. That doesn’t mean they have to stop donating to the national PACs or working with the leagues. Lobbying of course doesn’t require a PAC. Credit unions can do their part just by letting their representatives know that they exist and to enlighten them on what credit unions do for members. So what message should credit unions convey to their lawmakers? Stick to the basics–who credit unions are and why they are so important to consumers in today’s financial services marketplace. Credit unions have the ultimate advantage over banks in the lobbying arena–the credit union story. Credit unions are low-cost financial service providers that pay good rates. Their members are owners and have a stake in the credit union. Credit unions also present an alternative in the marketplace. What would happen if banks could roam unfettered? Without credit unions, banks could charge high fees and there is little consumers can do. Isn’t this a big part of the message credit unions should be touting? With the negative savings rate, high fuel costs, and a potentially falling housing market, lawmakers shouldn’t even consider taxing a low-cost financial service provider. Credit unions have to pull on the conscience of Congress. Convey the fact that a financial services arena without credit unions hurts Americans at a time when they can least afford it. Tell lawmakers about how the credit union has helped members having tough financial times. If CUs succeed on these basics and get more sophisticated, then they can move to the national lobbying objectives such as risk-based lending. Credit unions need to know their strategies going in. For example, they should be wary of playing the nonprofit card too heavily. Often structure is heralded as the prime differentiator with banks. Maybe, but the industry should hone in on some other differences, namely ownership and capital. Credit union members own a piece of their credit union and have a stake in its future. No matter if they have $10 or $10,000 on deposit, they have an equal voice. That’s powerful stuff. A major regulatory difference between banks and credit unions worth highlighting is capital. Credit unions can only raise capital by retained earnings, while bankers can raise capital much easier through issuing stock and other options. Talking about capital also lays the groundwork for getting Congress to see the light on a much needed risk-based capital system for CUs. Telling lawmakers feel-good stories about how CUs help members isn’t the same as producing statistics on how credit unions serve the underserved or those of modest means, but the stories can hep make the connection so data becomes less important. I don’t know what NCUA’s data collection pilot will show, but one fact that may rear its head is that credit unions serve a lot of middle class Americans. Why? Because many credit unions were founded to serve the employees of companies, companies which pay good wages. Credit unions shouldn’t be punished for this. The middle class has tough financial challenges and needs the help of credit unions. There has been so much talk about the low-income and those of modest means, but members of Congress can’t expect that to be the only segment credit unions serve. And Congress also needs to be reminded that people of modest means can’t be forced to use their credit union. They may make bad decisions, fall prey to predatory lenders and do other things beyond credit unions’ control. You can’t legislate who the underserved does business with! Credit unions that make a political connection locally with members of Congress are helping the industry as a whole fight issues like serving the underserved even if they don’t specifically address them. National lobbyists are key to political success, but the political capital credit unions build with lawmakers on a local level is priceless. Bonus Points I offer some bonus points here on things of interest I picked up at NAFCU’s recent congressional caucus: o NCUA Board Member Gigi Hyland stressed to attendees the need to submit comment letters on proposed regulations. Amen! I have been shocked in the past by the lack of comment letters on important proposed regs. Credit unions can’t leave comment letters solely to the trades. As Hyland said, all comment letters are read and they give board members a hands-on, real world look at how regs will affect individual credit unions. o NCUA offers an e-mail distribution system (known as Express) to disperse Letters to Credit Unions, Regulatory Alerts and other agency information to CUs. The agency has been able to save credit unions thousands of dollars by cutting out paper mailings and moving to the e-mail service. Incredibly, less than a third of CUs are signed up for this service. That’s much too low. More credit unions need to sign up to not only save the agency and, ultimately credit unions money, but to get this vital information in a timely fashion. NCUA does need to do a better job of promoting the service on its Web site. It’s tough to find. How about a logo? o Some credit union lobbyists believe the provision in the Credit Union Regulatory Improvements Act to increase member business lending limits to 20% of assets is killing congressional support of CURIA. They believe if the provision is stripped out it gives CURIA a legitimate chance of passing, whereas with it in, CURIA is a pipe dream. My two cents: strip it out. I say this because there are ways, such as loan participation and CUSOs, for credit unions to stay under the current 12.25% cap. Why not strip it out, get CURIA passed and fight the MBL fight another day. Another reason? If you haven’t noticed, NCUA and the SBA are working very well together. More CUs are becoming SBA lenders. This is good. Getting the SBA on the side of credit unions will help push a future business lending initiative. Yes I know many SBA loans are guaranteed and it’s a different ball game, but it is still business lending. o NCUA board members are correctly focusing on the irony of limiting the ability for credit unions to add underserved areas, yet asking CUs to do more to serve the underserved. It’s an obvious disconnect NCUA should continue to hammer. o It was a pleasure to attend a major credit union conference that didn’t have an exhibit hall. This is nothing against the many quality vendors out there, but taking the exhibit hall out of NAFCU’s Congressional Caucus makes it a no-nonsense event where the focus is on lobbying and political affairs, instead of getting trinkets in the exhibit hall. Of course this only works for certain events, and at some events the exhibit hall is truly a highlight. o Kudos to Fred Becker for turning over the microphone to NAFCU’s top lobbyist, Dan Berger, very early on in the opening session of caucus. Becker is high on Berger, a former lobbyist with America’s Community Bankers, and he showed it by letting him take the lead on an event that revolves around lobbying. It also gives Berger a higher profile with NAFCU, an association that has had a lot of turnover on the lobbying front of late. o Knowing when to offer attendees a break during a long opening session is key. At the caucus, many attendees were walking out for coffee after the keynote speaker finished and NCUA Chairman JoAnn Johnson was being introduced. It was disrupting. After Johnson spoke, a break was offered. It would have been much smoother to have it the other way around, especially for the NCUA Chairman. o I am not lobbying for the Cherry Blossom Run, though I think it is a worthy event with a great cause, but I was surprised to learn of the troubles the event has in attracting CU participation from across the country. Because of its D.C. location many credit unions believe it is a D.C. event–it is not. Credit unions from all over should come out to support this race and kill two birds with one stone by using the trek to D.C. to also meet with members of Congress and trade association leaders. –Comments? E-mail [email protected]

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