WASHINGTON — On Aug. 4, 1998, Congress cleared H.R. 1151 to theWhite House; three days later, President Bill Clinton signed thelegislation into law as The Credit Unions Membership AccessAct.

This year marks the 10th anniversary of the passage of thebill–a turning point for the credit union industry, which has hadlasting effects on more than 87 million CU members worldwide.

Then, as now, the events surrounding the fight to pass the billevoke strong memories of those involved in the battle, and an evenstronger resolve to right the problems that CUMAA created.

CUMAA had its genesis in the lawsuit, First National Bank &Trust Co. et al, vs. NCUA, which made it all the way to the SupremeCourt.

The suit the bankers brought challenged the rule that allowscredit unions to have multiple common bonds among their field ofmembership. Realizing that an unfavorable outcome could causemillions of CU members to forfeit their credit union membership,major industry trade associations NAFCU and CUNA filed amicusbriefs to support NCUA's position. Whether or not they knew it, awar had begun. Credit unions fought the bankers at every turn,until eventually the suit ended up in the U.S. Supreme Court, whichissued its verdict at the tail end of February 1998.

Eric Richard, senior vice president and general counsel at CUNArecalled, “The decision was due to come down during ourGovernmental Affairs Conference, our biggest meeting of the year.Sitting Justices for the majority were Justice Clarence Thomas,Justices [William] Rehnquist, [Anthony] Kennedy, [Antonin] Scaliaand [Ruth Bader] Ginsburg. Justices for the minority were [SandraDay] O'Connor, [David] Souter, [Steven] Breyer and [John Paul]Stevens. The general feeling in the movement at the time was thatthe outcome would be favorable.

The Newt Gingrich Factor

Richard continued to recount what he remembered as a veryelectric atmosphere. “The day before the ruling came down,” Richardexplained, “Newt Gingrich had just announced that he would sponsorH.R. 1151. It's very unusual for the Speaker of the House toco-sponsor legislation.”

Mark Wolff, senior vice president of communications at CUNA,agreed, “It was a turning point for credit union members andunderscored the importance of the legislation. People werecheering.”

The next day, however, the Supreme Court ruled against thecredit unions in a 5-4 decision, written by Justice ClarenceThomas. “We had a decision to make quickly,” Richard explained.NAFCU's director of regulatory affairs, Tim Pryor, and I werebackstage in the Cabinet Room and decided we needed and wanted tomake the announcement together. I'd only been at CUNA six or sevenmonths, and we had to walk on stage and make that announcement.”Richard recalled an audible groan that rippled through theaudience.

The announcement that the Supreme Court had ruled against creditunions proved to be a defining moment and galvanized an entireindustry. “I like to use this analogy,” said NCUA Public andCongressional Affairs Director John McKechnie, then-CUNA seniorvice president of governmental affairs. “It's like in the Wizard ofOz when the screen goes from black and white to color. All of asudden, the lights just went on.”

The War of Will

According to those interviewed for this story, the entire1996-1998 legislative framework was one of will: the will tocooperate, the will to keep political pressure on the Hill, and thewill of the grassroots credit union members not to lose theirability to belong to their credit unions.

“The effort to enact H.R. 1151 was undertaken in an environmentof 'life or death' for credit unions. Had we not pushed as hard aswe did for this legislation, potentially millions of credit unionmembers could have been thrown out of their credit unions — andmillions more denied credit union service at all. The impact oncredit unions would have been — as the bankers termed it —Hiroshima,” said Dan Mica, president/CEO of CUNA.

The credit union movement, its allies and key players inWashington (some of whom were not available for this story) beganthe two-year battle to pass H.R. 1151.

The legislative process is not an easy one. Yet, as McKechniecommented, “The two national trade associations worked in concert.There were some heated discussions between NAFCU and CUNA, but whenwe went to the Hill, we went with one purpose and one message.There was no disparity in our message. It also showed us theimportance of the credit union leagues and the grassrootsmovement.”

Fred Becker, president/CEO of NAFCU said it was, “a time ofadversity for credit unions.” On March 26, 1998, the then-HouseBanking Committee added 34 pages of amendments to H.R. 1151. Theamendment was designed to stop credit union member businesslending, but was defeated 27-25, with then-Chairman Jim Leach(R-Iowa) casting the deciding vote in favor of credit unions. Thebill then went on to pass the committee unanimously.

The Senate Banking Committee added five more amendments to H.R.1151 on April 30, 1998; another amendment on the CommunityReinvestment Act was also narrowly defeated, 10-9 when thethen-Committee Chairman Alfonse D'Amato cast the deciding vote infavor of credit unions, Becker said.

One of credit unions' heroes in Congress was Representative PaulKanjorski (R-Pa.). He told Credit Union Times, “I've been inCongress for 20 years. I've asked the credit unions to do some veryhard things through the years and they've done it. They havelasting legislative clout on the Hill because of it.”

“They're like the Boy Scouts,” he continued, “you call them andthey always come and perform.”

The Capitol Steps

Perhaps the most memorable “performance” by the creditunions–and one of the hardest–was a rally on the steps of theCapitol building that Kanjorski requested to demonstrate for theSenate the grassroots support for the bill.

“We only had about a week to put the rally together” said Wolff.“Rallies of this sort take a year or so to organize. It wasamazing. We had maybe four or five days and thousands of peopleshowed up.”

“The day was steaming hot–one of those July days Washington isfamous for,” said CUNA Mutual Group's Larry Blanchard, thennational campaign coordinator for the 1151 movement. “Everyonesweating, cheering and holding up these signs they'd come up with.I still get goose-bumps just thinking of it.”

According to Blanchard, this was the scene on the Capitol stepsthat greeted D'Amato and Gingrich after a private lunch with creditunion movement leaders. Blanchard attributed this rally as apivotal point in the campaign. He stated that the rally contributedto the good relationships credit union lobbyists and members of thecredit union movement enjoy on the Hill today.

With 206 powerful co-sponsors, CUMAA passed the Senate Aug. 4and was signed into law Aug. 7, 1998. “We turned it around in sixmonths,” Blanchard said. “That is very unusual for legislation ofthis magnitude.”

Living with the Legacy

Although 1151 was a win for the credit union movement andprotected millions of members from losing their membership, CUMAAleft a unique legacy in its wake–one the credit union movementcontinues to deal with today.

“It was a homerun,” said Becker, “but we did not hit it out ofthe park.” He pointed to the “unfortunate cap” on member businesslending and prompt corrective action requirements, characterizingthese as unfair and unwarranted regulatory burdens.

Perhaps the most important legacy of 1151, according to Richard,is that “it showed the Congress how powerful we could be. It gaveus political capital that we still enjoy today,” he said.

Becker concurred, “We have substantive legislative and politicalinfluence today. I would especially note that we need to use thatinfluence to pass [the Credit Union Regulatory Improvements Act]which will provide a legislative fix for the MBL [cap] andPCA.”

Looking ahead Blanchard added, “We are prepared for what iscoming in the fight for CURIA, but we need to unite, with ourallies and show the same passion for this legislation that weshowed for 1151. We need to continue to make it a priority of thefirst magnitude.”

Becker agreed, “The credit union leadership needs to continue tomake CURIA a strategic priority. We do not have access to thecapital markets. The only way for a credit union to raise capitalis through the balance sheet by commonly accepted accountingprinciples. We need a legislative fix for PCA.” He noted that intoday's economic environment it is very difficult for credit unionsto survive if they do not have access to the capital markets.

Brad Thaler, director of governmental affairs and NAFCU added,“That is one of the things that [Hurricane] Katrina taught us.Credit unions must have the freedom to maneuver that CURIA willprovide.”

Describing current lobbying activities used by the NAFCUlobbying team today to move CURIA forward, he said, “we continue tourge our members to talk to their representatives. Regulatoryrelief is our priority.” Thaler continued, “Today CURIA has 143co-sponsors that are only two away from the one third of the House.It demonstrates this is bi-partisan legislation.”

In Thaler's opinion, credit union lobbyists could see a hearingon CURIA in the House Financial Services Committee as early as thisweek.

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