Nineteen ninety-eight was a year like no other and one, we hope, never to be repeated.
In their quest to monopolize the consumer financial services market, in 1990 bankers initiated a lawsuit to limit consumer options to join credit unions. Following an initial court decision favoring credit unions, an adverse 1996 Federal District Court ruling, and the injunction against credit unions that came with it, there was widespread apprehension throughout the credit union community. Launching “The Credit Union Campaign for Consumer Choice,” CUNA and the state leagues intensified efforts to save the multiple-group credit union charter.
Then came the bombshell: on Feb. 25, 1998, while many of us were in Washington attending the CUNA Governmental Affairs Conference, the U.S. Supreme Court narrowly ruled, five-to-four, against consumers and credit unions. It was clear that the future of the credit union system was in jeopardy.
The campaign to add additional co-sponsors to H.R. 1151, The Credit Union Membership Access Act, gained momentum, but a massive grassroots political action campaign was needed to support an unprecedented Washington lobbying effort by credit unions. Two years before, the CUNA Board had the foresight to bring on Dan Mica as our leader, and he took steps to strengthen CUNA’s Washington team and to refine the political action system already in place. The state leagues were energized, but it took every bit of coordinated effort we could muster, and even then we lost some ground and nearly lost the battle.
At the California and Nevada leagues, we recognized our special responsibility, since we had the largest Congressional delegation by far, with more than 50 members of the U.S. House and Senate, including many members of the key House and Senate Banking (now Financial Services) Committees.
We had to deliver, and our staff and member credit unions knew it. We immediately added and diverted resources to maximize our efforts.
Our Director of Federal Governmental Affairs, Chris Kerecman, and I spent many weeks in Washington on the “Congressional schedule” – flying to D.C. on Mondays and back on Fridays, staying in an apartment temporarily rented by the league.
We spent countless hours in strategy meetings, in Congressional offices and in Congressional committee meetings, while back home credit union leaders were spending time in Congressional district offices and generating thousands of e-mails, letters, petitions and telephone messages to Congressional offices in support of H.R. 1151.
The Georgia league scored a home run when then-Speaker of the House Newt Gingrich became a co-sponsor of H.R. 1151, a rare action for someone in that position. I recall that later that same day I was with a group of Nevadans meeting with then-Congressman (now Senator) John Ensign (R-Las Vegas), who had been reluctant to co-sponsor H.R. 1151. He said he needed to see how the House leadership felt about the bill.
When we informed him that Speaker Gingrich had just come on as a co-sponsor, Congressman Ensign agreed to co-sponsor the bill.
The ‘Killer Amendments’
The bankers and their supporters tried everything to defeat H.R. 1151, and they very nearly succeeded several times. I recall being in the committee rooms when “killer amendments” were proposed that would have doomed the bill–during “markup” in the House Banking Committee, a brief recess was called and a few Republican committee members were convinced (in the cloakroom) by Speaker Gingrich and Committee Chairman Jim Leach (R-IA) to change their votes, which kept our bill alive; and in the Senate Banking Committee, Chairman Alfonse D’Amato (R-NY) was enraged when he had to cross over and vote with Committee Democrats, and against his Republican colleagues, to keep our bill alive.
In order to get the bill passed and solve the major field-of-membership problem in that charged and volatile environment, credit unions had to accept some provisions we didn’t like. Fixing the problem created by the bankers and the Supreme Court decision only required a simple bill of a few pages, but by the time that bill was passed our simple bill had been expanded to 37 pages, 23 of which were devoted to new “safety and soundness” or “prompt corrective action” (PCA) provisions that seemed unnecessary to most in the credit union system.
Remembering past savings and loan and bank failures, certain officials at the Treasury Department insisted that these PCA provisions be included in H.R. 1151 as a condition of Treasury’s support of the bill; opposition from Treasury would probably have doomed the bill, so there was little choice in the matter. Only hours of discussion and negotiation with these Treasury officials reduced the more onerous PCA provisions they proposed to ones it appeared the credit union system could live with.
We also had to accept field-of-membership restrictions that seemed unfair, along with objectionable limitations on member business loans, but that was the price of solving the basic field-of-membership problem and allowing credit unions to continue to serve most consumers who desire service from credit unions.
In the end, the 411-8 vote to pass H.R. 1151 in the House was impressive–with Congressman Bob Filner declaring on the House floor that “This one’s for you, Marla,” referring to Marla Sheppard, CEO of First Future Credit Union in San Diego, who emerged as one of our most effective political leaders–as was the 92-6 passage in the Senate, but the victory was much closer than that, and very nearly didn’t occur at all.
The credit union movement is better prepared than ever to prevail against those that wish us ill, but governmental affairs and political action must continue to have the highest priority. I trust we will never see another year such as 1998.
Dave Chatfield is the retired president and CEO of the California and Nevada Credit Union Leagues.
