Anti-NCUA Petition Leads To Divisions

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LIVONIA, Mich. — A petition circulated online by the head of a Michigan CUSO has sparked debate over how CUs should make their voices heard to NCUA and the Fed, while also revealing how angry many leaders are with their federal regulator.

Randy Karnes, CEO of the Grand Rapids, Mich.-based CU*Answers, has been circulating a petition nationwide to CEOs and CUSO leaders that called for a number of changes to how credit unions are regulated, including Congressional oversight of the NCUA board and splitting the NCUSIF from the agency.

But the petition drive isn't being embraced by everyone. Reportedly, several state leagues and other associations have discouraged people from signing the petition. David Adams, president and CEO of the Michigan CU League, said that while the intent of the petition is sound-encouraging credit unions to raise their voices-the process is wrong.

"I raise a serious process issue," said Adams, who sent an e-mail to CEOs in his state sharing his concerns over Karnes' petition. "Hopefully we have learned over the years that if we are divided in our approach and in our message, Congress will not take us seriously. This (petition) just serves to splinter us further by disregarding the important role of trade associations."

Karnes countered by questioning if CUs "have lost their voice. Have we lost our ability to act as individuals? Are we afraid of retribution? Have we been mesmerized by our lobbyists and associations to the point where we don't think we have to speak up anymore? Or, are we afraid to speak up?" Karnes noted that CUSO leaders and credit union CEOs nationally are not satisfied with how CUNA and the leagues are addressing the corporate crisis.

Karnes said the online approach was chosen to create a viral message legislators would pick up. "But it appears to me that our (state) association says the only way to effectively speak to anyone is through a groomed agenda. I truly believe today that politicians and regulatory agencies are listening to the 'net. So we all think that the only way to further the credit union agenda is to pay lobbyists or to march the Hill?"

In addition to Karnes' method, Adams is concerned the petition's message may harm credit unions. "The petition calls for additional Congressional scrutiny on the NCUA, which would be absolutely the wrong thing for credit unions now. In the aftermath of the financial crisis and at a time of budget crisis, Congress is more likely to streamline agencies as opposed to creating a new one. So asking for additional Congressional scrutiny or lambasting our regulator publicly risks losing our independent regulator, which would be far worse for our industry than many of the challenges we are dealing with now."

Karnes said he has received a "lot" of response to the petition, which he said was initially e-mailed to fewer than 50 people, but more than 100 have signed on to date. "And more people plan to sign it. They have called me and said they want to get their board's endorsement before they sign it." Karnes said numerous people have apologized for not signing, saying they feared retribution. "

Karnes believes efforts by several leagues to stifle the petition have actually helped boost awareness. "You have got to wonder if the leagues have a secondary agenda here because they are actually advertising the petition more than the petitioners are."

Karnes, who said his objective is to ensure that "anger turns into resolve," believes the state and national trade associations aren't being inclusive.. "There are just a lot of people who don't think they are included anymore. It's channeled down and down to the point where experts say we will speak for you, and ask why would you actually speak on the 'net at all."

Good Intentions, But...

For his part, the MCUL's Adams said the state's CUs "definitely support the comment that I made about unity and working through the association. But I also know there is a lot of anger directed toward NCUA." Calling the petition "well intentioned," Adams said his "disagreement was with the provisions in the petition that were too far reaching-things like throwing the board out. Going to a nuclear arsenal is not a good idea, because of the collateral damage that could result. I think it is smarter for us to be tactical and very specific in our approach."

He noted the MCUL already has made advocating "aggressively on the regulatory side" a 2011 priority. "But I would say that one thing that does not work very well in lobbying, whether legislative or regulatory, is to have a general agenda, such as throwing people out of office and splitting off the NCUSIF. What works is to take very specific, reasonable issues and surgically try to improve on the regulatory environment. And that's the approach we will be taking in 2011."

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