The Independent Community Bankers of America had the right idea not partnering with the big banks in the interchange battle. In a letter to state bank trade associations discovered by Bloomberg, ICBA CEO Camden Fine, more colorfully than I'll write here, stated that Wall Street doesn't care about the community banks but "only care[s] about the credibility small banks can wield on Capitol Hill to get them out from under this rock."
The same holds true for credit unions. Will the big banks be supporting credit unions' efforts in the coming weeks to push through legislation to expand their member business lending authorities? Heck, no. But credit unions stood arm-in-arm with large banks against debit card interchange fee regulation.
As I have written previously, credit unions' grass roots were pretty impressive in the interchange battle and it was a necessary war to wage in light of the anticipated income loss. In addition regulating interchange fee income without requiring an equivalent price reduction at retailers is patently anti-consumer; it will result in a double tax when the retailers don't lower their prices and the card issuers begin charging consumers one way or another on their end. Credit unions were ineffective in reframing the issue from anti-consumer to the retailers just want to lower expenses and increase profits. The powerful retail lobby effectively landed punches early and often, framing the issue as a 'hidden tax' on the poor American taxpayers during a recession.
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It's a confluence of events presenting a difficult challenge and mustering all your allies on Capitol Hill should be a priority. But the very entities that led to the downfall of the American-no, global-economy and this legislation?
The credit union lobby acknowledged chances of killing the legislation were slim, so if credit unions should have hitched their wagon to anyone, maybe it should have been the community bankers. Certainly some community bankers are rabidly anti-credit union too, but at least they aren't being vilified by lawmakers and consumers alike.
All that will be ancient history soon-or will it? There is talk that credit unions are losing favor with some of the more pro-consumer Democrat lawmakers; it was a risk the lobbyists knew they were taking.
If that's true, it could very possibly impact the congressional support credit unions will be able to garner as they head immediately into lobby for the member business lending legislation. CUNA and NAFCU have done a good job of setting the Udall amendment up as a no-cost way to assist small business, lower unemployment and boost the economy. Then-CUNA President/CEO Dan Mica delivered fiery testimony at a May hearing regarding the creation of a $30 billion fund for community banks' small business lending.
While putting $10 billion into the economy and creating 100,000 jobs, according to CUNA, is nothing to sneeze at, it's also small potatoes compared to the 14.6 million unemployed. It is commendable and supportable, and surprisingly enough, Frank has said despite pitting banks and credit unions against each other at election time, he's going to put it to a committee vote. Credit unions then can see who their true friends are and support their campaigns-or not-accordingly. Member business lending and this election cycle will be a real test for newly appointed CUNA President/CEO Bill Cheney as well as credit union lobbying in general.
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