ARLINGTON, Va. — NAFCU President Fred R. Becker Jr. is the association’s chief spokesman and lobbyist.
During his tenure with the association he has seen changes in how Congress has functioned and has revamped the organization’s operations to make it more member-friendly. Before joining the association in 2000 he was the naval affairs director for the Reserve Officers Association of the United States and prior to that that spent 25 years in the U.S. Navy, retiring as a captain.
Credit Union Times recently spoke with him in his office outside of Washington about the climate on Capitol Hill for credit unions and the overall political situation.
CU Times: How would you describe the power of credit unions on Capitol Hill these days? How does it compare to when you started?
Becker: I think credit unions are considerably stronger. The subprime crisis has resulted in us being in tumultuous times. But if there’s a silver lining in the subprime crisis, it’s Congress’ realization that in contrast from previous circumstances where there were questions about the value of credit unions and are they doing the right thing for their members, the subprime crisis has shown we are serving people in the right way, unlike some other people in the financial services industry.
CU Times: Some lobbies are feared, like the NRA and AARP. What’s the perception of the political clout of credit unions?
Becker: We are thought of as a powerful force. Credit unions, as you know, wear the white hats. If you carry a gun it makes sense to be feared. We don’t carry guns and don’t want to be in a position to be feared, but we want to be in a position where they listen to us and recognize that we do carry clout with our members. Our members are very concerned about their future and their financial future and what we’re doing for them. They expect, as a result, a full panoply of services provided by credit unions, especially since in today’s day and age they can get it elsewhere.
CU Times: How has the environment for credit unions changed in the eight-and-a-half years you’ve had the job?
Becker: The subprime crisis has changed things pretty substantially. We’re doing a marvelous job this year of pushing for regulatory relief when if anyone else in the country were asking for regulatory relief people would be scratching their heads and saying, “No, we think you need more regulation given what happened, not less.” At the same time there are a number of consumer-related issues that would have an adverse effect on credit unions or that we might suffer collaborative damage from. We need to be watchful of those and be sure that members understand the potential ramifications of them. We need to remind them that those who wear the white hats didn’t participate in this calamity or cause this calamity.
The bankruptcy legislation that was originally part of the mortgage bill is an example. As you may be aware, the consumer groups approached me and asked me why we were being in their view unreasonable in opposing the provision that allowed mortgages to be reset in bankruptcy. They thought that was unreasonable, but I said, “We didn’t cause the crisis, we didn’t participate in the crisis and that provision would adversely affect our members. It’s not like the money is going to some stockholder’s pocket, it’s going back to the members.” And so we went back and forth and had a good discussion. And under the worst scenario [and the measure died in the Senate], we would have ended up having it apply only to loans over the 3% threshold; it wouldn’t have applied to all loans. And so I think the environment has changed.
You have a Democratic Congress, and when I came you had a Republican Congress. At the same time, the desire to provide credit unions more regulatory relief is quite prevalent.
CU Times: Talk about the upcoming presidential election. What would a McCain presidency mean for credit unions? What about an Obama presidency?
Becker: As you know, Senator McCain is a member of a credit union (Navy Federal Credit Union), and as I understand it, Senator Obama is not. But on the issues, let’s talk about the Treasury Blueprint. When they have talked about it, they haven’t talked specifically about credit unions, but there will be conversations starting from our side about the unique and important role of credit unions. I think both will be sympathetic to credit unions, especially since one’s a member and the other I am sure has an understanding of what we do, though we haven’t talked to him specifically about it.
CU Times: You’re a Navy guy. How well do you know Senator McCain?
Becker: I’ve met him. I’ve had lunch with Rick Davis, his campaign manager. I’ve worked with him when I was in the Navy. Rick Davis was head of a housing group [the Homeownership Alliance, a coalition of real estate, financial services and advocacy organizations working to further support for the American housing system].
CU Times: How would you describe your relationship with McCain? Cordial?
Becker: Cordial. Willing to listen. Very inquisitive.
CU Times: How about Senator Obama? Have you met him?
CU Times: Have you talked with your members who have met him?
Becker: No. The lobbying staff works well with both sides of aisle. As you know, we cover both parties. And I don’t see any cause for concern with either one at the present juncture.
CU Times: You spoke about credit unions wearing the white hats during the subprime crisis. When you talk to members of Congress are there misconceptions about credit unions that you have to dispel?
Becker: The rhetoric that you used to get about credit unions, especially the large credit unions not serving the right people, you’re not getting that any more. People realize that credit unions have to grow to the extent that the economy grows. If the economy grows faster than you do, then you fail to exist, so credit union growth is a natural thing, not a bad thing. If you look at the history of some of the large credit unions, they started out very small. One of my board members Larry Wilson [President/CEO of Coastal FCU in Raleigh, N.C.] has been there more than 30 years and he was the first manager. Since then, there has been such growth that you now have a billion-dollar credit union. To serve your members and offer them the panoply of services they expect today, to a certain extent, size helps. Duke University, for example, has its own federal credit union and that one’s relatively small, but those professors at Duke expect the same services they can get at a bank, the same financial services, et cetera. Over time, people have come to understand that. At the same time, credit unions have done it the right way, unlike the way some people have done it, which has caused the mess we’re in.
CU Times: What about the other side. When you talk to credit union executives, what’s the biggest misconception you find about how things work?
Becker: Let’s take for example CURRA [the Credit Union Regulatory Relief Act] and how CURRA originally did not pass [though it passed the House in another form.] I think there wasn’t an understanding that all the grassroots in the world wasn’t going to help in that circumstance because the members [of Congress], as a result of our pushing for it and the bankers pushing against it, were caught in a Catch 22. They didn’t want a recorded vote, where the recorded vote would be for one industry and against another in the middle of an election year. It was pulled from the calendar in the dark of the night because members went to the leadership and said “don’t put us in this position in an election year.”
You could have a march on Washington that couldn’t turn that around. And understanding that sometimes the politics will prevail, that gets frustrating. I understand that. I came from the Navy, as you know, and knew that credit unions are intent on doing the right thing and Congress wants to do the right thing too, but some times things get in the way.
Last year, Congress fully intended to hold hearings on CURIA [the Credit Union Regulatory Improvements Act], but the world changed in August during recess, the subprime mess took off. As I said in a speech to the Housing Alliance, often Washington is only good at focusing on one thing. When they came back from the recess [House Financial Services Committee Chairman] Barney Frank held a hearing within two days on the causes of the subprime mess, and they have stayed focused on it ever since. And you can’t expect them to go off of that focus because the country expects them to do something…
CU Times: What’s next for credit unions, politically? Looks like you’ll get a modified version of CURRA. You’ll shoot for CURIA at some point. What’s next on your Christmas list for Santa Claus?
Becker: If we can get CURIA that would pretty much take care of us for the interim. There are always other things that come up.
CU Times: What are the chances for CURIA?
Becker: I think that there’s recognition on both sides of the aisle, within the administration, within the Congress that risk-based capital makes sense. It’s a question of when we get to it. And that will depend on who’s in charge next year and who comes in in the administration. Who the assistant secretary for financial institutions is and what’s going on in the country that they have to turn their attention to immediately. Today, it’s investment banks and getting them under control. Who knows what it will be next year. My sense in talking to all sides is that it makes sense.
Why shouldn’t credit unions be judged on the basis of risks, just like banks? It’s an improvement. But the banks remain against it, you’ve got to wonder why. They make accusations that credit unions are unsafe but then banks don’t want risk based. That doesn’t make sense, but it’s not the first time that the ABA has been a little duplicitous in their argument. They are duplicitous on the Blueprint as well.
CU Times: What about MBL caps?
Becker: I think in today’s environment, given that banks have pulled back in giving loans, that’s a problem. As you know, small business is what runs the country. They’ve sort of forgotten that on the last day of the Clinton administration there was a Treasury report that said MBL was not a threat to the banks, and I don’t think that that’s changed at all. And my sense is that if they really want to help small business in this environment, now’s a good time. That being said, of all the issues, banks remain the most opposed to that one.
CU Times: What’s the biggest substantive change with the Democrats controlling Congress?
Becker: The current Congress seems very focused on consumer issues. The consumers are being treated with respect to credit cards and overdraft fees, interchange, et cetera. And some groups, like the merchants on interchange fees, have their own agenda and are working very hard to convince the Congress that the consumer is not being benefited by the interchange fee. While if the fee were eliminated, the only person who would benefit would be the merchant, and I guess some consumers are important too. There’s not always a complete understanding of where the fee goes and how it’s implemented. Again, it’s been our job to point out the differences….
CU Times: One more thing, what about the regulatory environment. What do you fear on the regulatory side from a Democratic administration?
Becker: It’s already starting. Congress doesn’t have the votes to pass legislative changes, so they are putting pressure on the regulatory agencies, be they the Federal Reserve or NCUA to take care of these matters. And I call that jawboning and that can and does have an influence. Look at the regulations already out there that the Fed has proposed [on issues such as credit cards.] It’s a question of how much political will for more things to be done there will be. There needs to be a wait-and-see to see the impact of those regulations implemented before the end of the year to see from both sides whether they are working or whether more needs to be done.
CU Times: What’s the future for the clout of credit unions?
Becker: It will continue to grow over time. You have to keep your presence known, even in the best of times because it answers their [Congress'] questions and keeps you in their minds. Also, the town turns over regularly, so there is a constant battle on our part to inform the new folks about what we do.