Credit unions sowed the seeds for future political wins byplanning a rally on the National Mall while President George H.W.Bush sowed the seeds for the demise of much of his support amongconservatives by reversing his pledge not to raise taxes.

Those were among the political highlights of the year CreditUnion Times was founded.

CUNA had already created Operation Grassroots to fightlegislation that could hurt credit unions amid the regulatoryrestructuring efforts that followed the savings and loancrisis.

In 1990, the Bush administration began to discuss restructuringthe agencies that regulated financial services and taking away theNCUA's independence. An unnamed official told The New YorkTimes that such a plan had “the attraction of simplicity” andappeared to be “quite workable.”

In addition, the Treasury Department floated the idea of forcingcredit unions to write off as an expense their 1% capitalizationdeposits in the NCUSIF.

Credit unions had other ideas.

Larry Blanchard, who was CUNA's senior vice president, said thegroup sought in the pre-Internet era to organize a grassrootseffort to show lawmakers that credit unions would fare poorly ifthey were lumped in with other financial institutions.

“We needed to show that there was tremendous credit union unityon this issue,” Blanchard recalled.

So they developed plans to exercise their First Amendment rightto peaceably assemble and petition the government for a redress ofgrievances.

To help build momentum for the rally, Blanchard made a videoinspired by the classic film “It's A Wonderful Life.” The video,called “CURSE of the Banks,” imagined what life would be like ifcredit unions came under the regulatory purview of the TreasuryDepartment. (CURSE was an acronym for Credit Union Regulation,Supervision and Examination, the possible name for the regulatoryentity that would oversee credit unions.) Blanchard's videodepicted a long staircase that led into the bowels of thedepartment's office, where people would get lost trying to findtheir regulator.

The effort worked. CUNA gathered six million petition signaturesand held a rally in conjunction with its annual GovernmentalAffairs Conference on the National Mall on Feb. 28, 1991 thatattracted about 15,000 people. Simultaneous events at statecapitals drew comparable crowds.

At the Washington, D.C., rally, people carried signs withsayings such as “If it ain't broke, don't fix it.”

Clinchfield Federal Credit Union President/CEO Sandy Lingerfelttook her first airplane ride to be there.

“I was overwhelmed by the enthusiasm of everybody there and waspleased we were able to accomplish something significant and have avoice in our government,” Lingerfelt recalled. “There were nostrangers at the event. Everyone wanted to share experiences andcompare notes of how they were helping people. Before the event, Iknew credit unions were fantastic, but I didn't know how widespreadthe feeling was.”

After the rally, where several lawmakers spoke, attendeesdispersed and delivered their petitions to Capitol Hill.

Blanchard said the rally and related activism “united creditunions, regardless of their charter.”

In the summer of 1991, Congress passed the Federal DepositInsurance Corporation Improvement Act, a comprehensive financialservices bill that did not include the proposals most distastefulto credit unions.

The measure required credit unions and other depositoryinstitutions to be more transparent in disclosing fees and interestrates on deposit accounts. It also required credit unions lackingfederal share insurance to disclose that to members and repeat itin all advertisements. Members also had to sign a statementacknowledging that they were aware of the credit union's lack offederal insurance.

The question of federal versus quasi-private insurance was a hottopic because of problems in Rhode Island. Press accounts from thetime report the collapse of the Rhode Island Share and DepositIndemnity Corp., a state-supervised but privately funded and runentity that insured many banks, credit unions and savings and loanassociations. When that happened, on Jan. 1, 1991, the state frozeassets at 33 credit unions with assets totaling $35 million and 10other financial institutions. Eventually, the NCUA providedinsurance for 22 of those credit unions.

The problems facing troubled credit unions during that timeprompted the NCUA to create the Asset Management and AssistanceCenter to help the agency unload foreclosed assets received fromclosed credit unions.

In addition, losses resulting from bad commercial lending bysome credit unions led the agency to strengthen its enforcement ofmember business lending.

While the financial services industry was in tumult, so wasBush's political standing.

In his 1988 acceptance speech at the Republican NationalConvention, Bush said,

“My opponent won't rule out raising taxes. But I will. And theCongress will push me to raise taxes and I'll say no. And they'llpush, and I'll say no, and they'll push again, and I'll say, tothem, 'Read my lips: no new taxes.'”

He broke that pledge in October 1990 when he signed a budgetpackage that combined spending cuts and tax increases.

Although many budget analysts credit the package with helping toreduce the budget deficit and eventually laying the groundwork forthe surpluses of the 1990s, it irreparably damaged Bush's standingwithin the increasingly conservative Republican Party.

Republicans' tepid support for Bush in 1992 coupled with publicdiscontent over the sluggish economy combined to cause Bush to beone of only four 20th century presidents denied re-election.

Bush's political fate may have been sealed in 1990, but creditunions came out of that period with greater clout. They would buildon that strength eight years later to achieve a major victory inpersuading lawmakers to pass the Credit Union Membership AccessAct, which reversed a U.S. Supreme Court decision and gave creditunions broad authority to expand their membership.

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