The time has come for credit unions to do more than just defend the movement's tax exemption-it's time to go on the offensive and focus on regulatory reform, according to NAFCU CEO Fred Becker.
During his opening remarks at the trade group's 38th Annual Meeting, Becker signaled a change in tactics at NAFCU that he would like to see emulated by the credit union industry as a whole.
Becker said the issue of taxation has "preoccupied" many in the CU movement for the past year. While credit unions must remain vigilant in this sector, he advocated a change in tactics in the upcoming months-a move towards pursuing regulatory relief.
According to Becker, CUs must use their "unique characteristics" to obtain regulatory relief that is "long overdue."
"I don't think I have to tell you of the ever-increasing regulatory burdens placed upon credit unions that divert resources from a focus on member service and credit union growth and innovation," he said to a packed ballroom in the Mandalay Bay conference center. "You are all too familiar with the burdens of complex regulation and you are telling us about it more and more frequently."
Becker suggested giving members addresses for websites or toll-free numbers where they can obtain information regarding laws and regulations that affect CUs. Because credit unions are member-driven and consumer-oriented, they are "best positioned" to question the necessity of some laws and regulations and the benefits, if any, that members derive from them. "And we have a fiduciary obligation to do so," he said.
Pushing for CURIA
Becker said passage of the Credit Union Regulatory Improvement Act, or CURIA, is a top-level priority for NAFCU. He thanked JoAnn Johnson, NCUA chairman and a speaker at the conference, for her leadership in developing a risk-based approach to credit union capital. He also thanked Reps. Ed Royce and Paul Kanjorski for their "willingness to step forward and assume key leadership roles in introducing CURIA in May."
When attendees arrived for the opening general session of NAFCU's conference, they found on every seat four pre-printed postcards. Two of the cards were addressed to Reps. Royce and Kanjorski, thanking each Congressman for introducing CURIA.
"We appreciate your support and guidance. We look forward to working with you in passing this historic legislation. Thank you from America's Credit Unions!" the cards said.
The other two postcards had a blank spot for the name of the attendee's representative. Each card noted Reps. Royce and Kanjorski's introduction of CURIA on May 12, and said: "Your credit unions and their members would like you to co-sponsor HR 2317. Please Help! Your credit unions need your help!"
NAFCU first handed out the postcards when CURIA was introduced in May. The annual conference, with more than 2,000 attendees, is the largest single distribution point for the postcards, a spokesman for the trade organization said.
Conversion Issue
Becker said the NAFCU board has appointed a task force to draft the trade organization's policy regarding CU conversions to a mutual bank-which, he noted, often resulted in a further conversion to a stock-owned corporation.
"We all know these conversions have been in the news of late, and, like the credit union community as a whole, the NAFCU board is carefully studying this issue," he said.
CUs must, first and foremost, continue to operate for the benefit of the members, and any change in operations or charter must be to benefit members, Becker insisted. However, he also acknowledged the importance of freedom of choice when it comes to the conversion decision.
"It is important to recognize that the management and boards of credit unions are the leaders of a unique, very special and important sector in today's financial services industry. As such, they have been provided with a special trust-to oversee the operations of the institution for the benefit of the members. Any monetary gain that might be incurred should, of course, be returned to the members."
Becker said the CEO and staff of any CU that is considering a conversion has an obligation to ensure the membership is given all available information so it may make an informed decision.
"We should apologize to no one for making the conversion process fully transparent and ensuring that it is effectively regulated."
On a personal note, Becker said he and his wife have always belonged to CUs, and they made sure their daughters also joined. He said credit unions have served the family well over the years, and said someone would have to do "a whole lot of convincing" to get him to vote to approve a change.
"It is very hard, if not impossible, for me to imagine how anyone else would approve the loss of their credit union," he declared, adding he would discuss the issue with attendees during the conference.
Modern-Day George Bailey
As have many before him, Becker turned to Frank Capra's well-known holiday movie, "It's A Wonderful Life" to point out the difference between credit unions and banks.
The film's hero, George Bailey, and his family operate a financial cooperative in a small town fights to keep the cooperative alive despite the efforts of the town's richest man, Mr. Potter (a banker, of course) to put the cooperative out of business.
According to Becker, the spirit of George Bailey lives on today in the people who run credit unions, including the CEOs, staff members and volunteers.
He cited a recent Washington Post story that noted bankers' profits remained at record levels in the first quarter of 2005, and CEOs of large banks receive annual compensation of $15 million or even higher.
"They make more, on an annual basis, than the individual assets of over half of the nation's credit unions. I guess these bank CEOs are having a wonderful life," he said.
Despite the record profits, banks still are trying to impose a tax on CUs, Becker continued. He said the bankers want to make their lives more "wonderful," as did the fictional Mr. Potter.
"When all is said and done, however, I, like you, would rather go home at night like George Bailey," Becker told the audience. "George knew he had a better life. Not dollar-driven, but self-satisfying, knowing he helped make the lives of others better. In the end, George Bailey was indeed the richest man in Bedford Falls.
"I believe most members of Congress are well aware of the bankers' 'wonderful life,'" Becker declared. "They also know about credit union efforts to make their members' lives better. As a result, the bankers' attacks on credit unions have gotten absolutely nowhere at the federal level."
Despite this, he added, CUs should not for a moment relax when it comes to the issue of federal taxation. "It is never wise to let your guard down."
