With more than 115 million U.S. consumers choosing credit unions and securing the benefits of lower loan rates, better savings rates, lower fees and trusted guidance in their best interest, the beneficial impact it has had would be hard to dispute. Had the Credit Union Membership Access Act not passed, millions of U.S. consumers would be at the mercy of bank practices and pricing. For-profit banks are incentivized to maximize profits even when it is at the expense of their customer. Without the credit union alternative, the costs borne by the consumer over the last two decades would be enormous and incalculable. Even bank customers have benefitted from the market discipline imposed by credit unions being viable and relevant to the consumer. Given the net benefit to the economy and the U.S. taxpayer of credit unions demonstrated in multiple recent studies, there is no downside to this important public policy decision taken by courageous legislators twenty years ago.
The banking industry has had a lot more to worry about than credit unions. Their reckless practices in the subprime mortgage business followed by U.S. taxpayer bailouts (TARP, etc.) have kept them busy. Attacking credit unions during that time when we were helping the consumer and small businesses victimized by the subsequent economic collapse would have been unseemly and unsuccessful. Hopefully, consumers and small businesses don’t forget the hard lessons of the past. Having a diverse and viable alternative to for-profit banking is essential to the individual and to the U.S. economy. The largest banks that survived were rewarded by growing even larger and now constitute essentially an oligopoly where consumers only have a few to choose from. Community banks have been busy buying each other out to reward their investors and now are trying to form new ones to repeat the cycle -- not necessarily in the interest of their customers. Because banks are incentivized to eliminate competition to maximize profits, their trade associations, at their behest, will continue to attack credit unions’ right to exist, grow and modernize to remain relevant to their members.
Speaking with a banker recently who was involved in the lawsuit, he recalled the legislative victory (HR 1151) as “overnight.” It was actually the time from February 1998 when the U.S. Supreme Court ruled in the ABA’s favor to August of that same year when President Clinton signed the Credit Union Membership Access Act into law. We had gotten busy with the legislation back in July of 1996 when the ABA got legal ‘standing’ and after the case had moved to the U.S. District Court of Appeals for the District of Columbia that historically had been friendly to the banking industry. Still, in comparison to the slow-as-molasses legislative process in Congress today, it was remarkable and demonstrates what can be done when credit unions, our trade associations and our members work together. It is certainly preferable to avoid close-calls of extinction than to fight them and part of the problem in the 1990s was that Congress and the general population was mostly uneducated on credit unions. Threats of a similar nature such as the recent Tax Reform legislation were not ‘do or die’ because we are in a much better position than we were then. CUNA and NAFCU and individual credit unions have done a much better job of working with Congress, state legislatures, the U.S. Treasury and the executive branch to make sure they understand the important role credit unions play in the lives of their constituents and in the general economic health of the United States. At Truliant, we never forgot the lessons of the bankers holding all the cards and we devote significant time, money and human resource -- both staff and volunteers -- to engaging with public policy makers. However, if challenged, we believe we could re-activate our members to become pro-active in the fight because we have never stopped educating them on their ownership of the credit union. They experience the value of that ownership on a personal level and would fight if it were threatened, particularly by the banking industry.
The CUMMA actually helped to re-invigorate the commitment to the philosophy and culture unique to credit unions. It made us realize that we had to be able to differentiate credit unions from banks or we would be eliminated as an option (as the S&Ls were when they insisted on becoming commercial banks). The heart-felt support from our members and staff essential to the victory was another powerful reminder of our obligations as a member-owned financial institution. Even credit unions that were leaning toward being more ‘bank-like’ couldn’t ignore the powerful forces of consumer expectations and the growth potential available with the charter. The ensuing meltdown of the banking industry, Bank Transfer Day, Wells Fargo Bank scandals and a general mistrust of the banking industry continues to reward credit unions that truly demonstrate their commitment to their membership and communities by differentiating their policies and practices. Because our mission is to improve our members’ lives, credit unions have continued to modernize and provide the advanced delivery channels and simple, convenient access to a rich portfolio of services that they demand. Notably, credit unions, because of our structure, can provide guidance in the members’ best interests and that is even more important than the service itself. Hopefully, we are getting better at making more consumers aware of the value and availability of credit unions as a viable option to help improve their lives. Credit unions are more appealing than ever to the U.S. consumer, including younger members, but we must remain committed to protecting and expanding the ability to serve our members, making sure we never lose sight that they are the reason we exist as an option to banking.