New CUNA Lobbyist Has Seen CUs Gain Equality on Capitol Hill

WASHINGTON – Credit unions came full circle during his 25 years on Capitol Hill, CUNA's new Vice President for Legislative Affairs Dean Sagar observed.

Credit unions have gone from not really being a factor in financial services legislation in the 1980s to fighting tooth and nail in the 1990s to gain equal consideration in the new millennium. Even regarding the regulators in the lead up to the deposit insurance reform legislation, the FDIC recognized the need to treat NCUA comparably.

Sagar should know. He participated in the development and drafting of the Credit Union Membership Access Act of 1998 when he served as a senior legislative analyst for the House Banking Committee (now the Financial Services Committee). He has worked on banking and consumer protection issues, monitoring the impact of legislation on credit unions, thrifts and secondary market activities and developing legislation on financial and medical privacy as well as deposit insurance reform. However, as such, he is restricted from lobbying the committee for a year. Members can call Sagar on issues, but he cannot initiate contact. He did not even attend the recent hearing on credit union conversions.

A timely issue that underscored the elevation of credit unions as an equal player in the legislative process is the Senate Banking Committee's regulatory relief package. Each sector got four specific provisions: one to expand powers, one that was timely, and two technical corrections, Sagar analyzed. He admitted that whether the breakdown of the types of provisions were by “intent or accident, I don't know.” But, looking at the bigger picture, Sagar said the treatment of credit unions in the same manner as banks and thrifts demonstrates they “consider credit unions an equal player that deserves consideration.”

The battle between the banks and credit unions has risen in prominence, particularly after the American Bankers Association's “March Madness” campaign, Sagar fielded a few more questions on the matter while he was still serving on the staff of the House Financial Services Committee. In March, the ABA circulated little basketballs on Capitol Hill urging Congress to stop the credit union “madness.” “Was it resonating? Were people really being affected by it? I don't think so,” he stated.

Lawmakers have to be very careful about how they respond to either side of the battle that is growing ever more consistent. The war is rising in prominence mainly “just because it's not a twice a year issue anymore.” For example, Sagar recently met with a group of Florida credit union executives who were bemoaning the fact that some of their generally friendly members of Congress were reluctant to sign on as co-sponsors to the Credit Union Regulatory Improvements Act (H.R. 2317). Lawmakers, especially members of the committee of primary jurisdiction, do not want to pick sides in the credit union-bank battle. When asked about Financial Services Committee Ranking Member Barney Frank's (D-Mass.)-Sagar's former boss-letter to NCUA on the two major Texas credit union conversions last year, he said the congressman was simply suggesting the agency had bigger fish to fry. “Mr. Frank's letter was not so much to take sides in the issue so much as to tell NCUA to `cut your losses,'” Sagar explained. Conversion of credit unions to mutual savings banks was another subject he responded to a lot of questions on from members of Congress.

With their hard-won equality, “What credit unions have to do now is not to defend themselves but to define themselves,” Sagar said. CURIA could help do just that.

The reluctance of legislators to choose sides also makes CURIA's 120 co-sponsors that much more significant, he pointed out. The legislation that would provide a risk-based capital system for credit unions and expanded member business lending powers looks to be a “surrogate for the tax issue” from the bankers' perspective, Sagar commented.

“People are still signing on in the absence of an immediate fight. That is significant,” he said. Sagar pointed to the H.R. 1151 battle where there was an impetus to push legislation through. “When Congress wants to and a constituency needs help, they can act quickly,” he said.

Sagar added, “We have not seen an open attack on [CURIA] until the Simmons letter.” On Oct. 12, 2005, ABA Chairman Harris Simmons, a regular credit union antagonist, told ABA members to write their members of Congress urging them to oppose CURIA. “Their most effective argument is.you're lowering capital while you're raising all this risky lending,” Sagar said, providing a visual demonstration with his hands.

What credit unions need to do to counter that is explain that credit unions do obtain the requisite expertise to engage in business lending activities, usually from ex-bankers. Many times, the business lending route is not cost-effective to credit unions and so they do not pursue it, he said. Credit unions “are not trying to get at the bankers' pot,” Sagar said, but the programs cannot be too much of a drain on credit union resources either without hopes of recouping the costs.

Sagar Knows Bankers

Sagar's understanding of the bankers' perspective as a former top Financial Services Committee staffer is something he hopes will benefit CUNA. The conversion issue is a big one because the bankers' have made some in-roads with the argument that larger credit unions should convert, which he said is not true and that NCUA is not blocking these conversions. “A lot of this has been just getting better notice,” Sagar explained. Credit unions took the opportunity to pound home this message at the May 11 hearing. If anything, he said, there needs to be greater disclosure of post-conversion activities.

Sagar added, “We've already been told [the Credit Union Charter Choice Act] is basically dead.” However, CURIA contains an important provision to ensure a minimum number of credit union members participate in any conversion votes.

He also said he would like to use his contacts on the banking side to “form a bridge where issues could be negotiated through.” Having worked on the Hill as a Democratic staffer when the Republicans have been in control for more than a decade, engineering deals became a way of doing business for Sagar. He explained that the Republicans had not passed a single consumer protection piece of legislation since they took over, but by putting some amendments on the Gramm-Leach-Bliley Act and in renewing the sunsetting provisions of the Fair Credit Reporting Act, a few got worked in. Another way of advancing consumer issues was to bolster credit unions in order to combat bank abuses, he said. “Credit unions were the only option I really saw if I wanted to stay in financial services,” Sagar said of his move to CUNA. When Sagar is not brokering agreements on legislative and political issues, he likes to spend time with his four children. His two oldest are busy attending college and med school while the younger two are big into athletics. Sagar referred to gardening as his “therapy,” but he is also an avid reader and researcher. He is currently helping a friend with a book on Joseph Pulitzer. -

scooke@cutimes.com