The two national credit union trade associations are doing something that credit unions do all the time, but that hasn’t happened between CUNA and NAFCU for decades – collaborating.
The Credit Union National Association and the National Association of Federal Credit Unions announced
“With approximately 6,000 credit unions that represent nearly 105 million Americans, NAFCU and the CUNA/[state credit union] league system will take whatever actions are necessary to protect and defend the interests of credit unions and small businesses,” CUNA President and CEO Jim Nussle and NAFCU President and CEO Dan Berger said in a joint statement from the two groups. “Our trade associations support the NCUA’s member business lending rule, which is consistent with the law and allows small businesses more access to the capital they need.”
The two trade groups plan to use the law firm Williams & Connolly LLP to challenge the lawsuit.
Repeat of HR 1151?
While the two trade groups often work on parallel tracks when it comes to legislative and regulatory issues, they rarely – in fact, almost never – come together in a full-throated partnership. Indeed, a number of observers believe the last time the two groups formed this sort of alliance was nearly 20 years ago – for another legal challenge launched by bankers.
Ironically enough, it was that very lawsuit that has led to this one. In that case, bankers were challenging NCUA’s decision to allow credit unions to have fields of membership (FOM) with multiple common bonds, such that a CU that was originally chartered to serve one specific employer, for example, could add other employers groups to the FOM.
That lawsuit went all the way to the Supreme Court, which ruled in favor of the banks, touching off the crusade to pass legislation—known as HR 1151 or the Credit Union Membership Access Act—to essentially overturn the Supreme Court decision. Credit unions were successful in that quest—but at a price. The legislation, which originally was only a few sentences long, grew to be many pages long, and included the restrictions on member business lending that this new rule was designed to reform.
“We saw this same type of arrangement with the Campaign for Consumer Choice, back when they were doing HR 1151,” noted Geoff Bacino, a former NCUA board member and now a partner at Bacino & Associates in Washington. He went on to note that the magnitude of that lawsuit – and the current ICBA suit – necessitate the partnership.
“I don’t think there’s been a lawsuit that would equal what we saw in timers of the financial commitment, outside of 1151,” he said. “It bodes well that they are doing it in this case, because frankly, to have two separate tracks doesn’t make any sense. They realize there is only one defense, and we can mount it together.”
And while the ICBA’s suit may not lead to a long-term alliance between the two trade groups, it may be the first step in a series of partnerships should the banking trades sue over Field of Membership reform – a move they have
‘A United Front’
John McKechnie, a partner at Washington-based consulting firm Total Spectrum and a former official at CUNA and NCUA, echoed Bacino’s belief that the bankers intend to sue regarding the finalized FOM rule, and while these aren’t the first high-profile attacks from banking groups, “it seems like they’re coming at credit unions on all fronts now.”
Which is all the more reason, he said, for the national trade associations to band together.
“I’m reminded of Benjamin Franklin’s observation ‘We should all hang together or we will all hang separately,’” said McKechnie. “In a time like this, credit unions need lock arms and present a united front against the bankers’ attacks, because they’re becoming more intense and more frequent.”
