ARLINGTON, Va. — NAFCU's decision to lobby President Obama to consider a credit union representative for a seat on the Federal Reserve Board of Governors appears to be the first time the trade group has lobbied the White House on a Fed appointment.
In a letter sent to the president and White House Senior Adviser Valerie Jarrett on April, NAFCU President and CEO Dan Berger said that a "well-educated, experienced credit union CEO would add value to the Federal Reserve Board of Governors by offering both the credit union perspective and, more generally, the perspective of smaller community lenders."
Berger also argued that having a CU representative on the Fed would strengthen the dialogue between the board and the community.
The vacant seat is the result of Gov. Jeremy Stein's resignation from the board earlier this month.
First Time In 'Recent Memory'
A NAFCU spokeswoman told Credit Union Journal in an e-mail that this is the first time in "recent memory" the trade group has lobbied a president on Federal Reserve Board appointments.
And though the trade group has not recently lobbied a president on Fed appointments, it has been conspicuous in its silence over the years, most notably in 2007 when it kept quiet on the nomination of credit union antagonist Elizabeth Duke in 2008. (Duke was confirmed by the Senate and served five years on the board.)
Don Cates, CEO at the $763 million-asset 3 Rivers FCU in Fort Wayne, Ind., said he was surprised by Berger's move, noting that, "I can't say I've ever seen the [American Bankers Association] promote [JP Morgan Chase & Co. CEO] Jamie Dimon to go on the Fed board."
"I think it's ambitious, because the board itself is typically made up of academics and politicos," said Cates. "While they're all extremely intelligent, we out here in the real world probably can't relate to those backgrounds very much. I think that's probably the way it would go, but shooting for the stars is not a bad idea."
In his letter, Berger said NAFCU applauds Obama's "recognition in the most recent State of the Union address of the need for creditors to continue to fund small businesses. The nation's credit unions are uniquely qualified to help make this a reality by strengthening access to financial services in communities throughout Main Street America."
Peter Sainato, CEO at $598 million Justice FCU in Chantilly, Va., said NAFCU's move "makes a lot of sense."
"If you look at our numbers across the country, we have over 99 million members, so just from that perspective alone it makes sense," said Sainato. "If you dig a little bit deeper into the credit union industry, we're a cooperative, and as cooperatives we [don't have] stock holders. That provides an ideal perch to provide unbiased input into the Federal Reserve Board. So I'm all for it."
Sainato conceded that a credit union CEO would not provide the Wall Street perspective the president might be looking for, but said a dose of Main Street could also be relevant to the Board. "You're only looking to have some input on the board and some input to help them make better decisions."
'Vital Role'
Berger also reminded the president of the "vital role" that credit unions play in the economy and cited a study the trade group recently commissioned that examined what would happen to the U.S. economy if eliminating the tax exemption significantly reduced the presence of CUs.
The study identified the total benefit to U.S. consumers from the presence of credit unions in financial markets to be $153 billion between 2005-13, or $17 billion a year.
"Further, credit unions continued to help the American economy by lending throughout the financial crisis when the banks, both large and small, stopped doing so," Berger noted.
And while the health of the CU community continues to improve, "today's regulatory environment is characterized by overregulation and high compliance burdens," wrote Berger.
"The credit union industry works to mitigate some of these issues through its robust dialogue with the Federal Reserve Board of Governors, and it would be instrumental to that dialogue to have a member on the Board with deep credit union knowledge and experience," he added.
3 Rivers FCU's Cates noted that even if Obama does not nominate a credit union leader for the Fed seat, NAFCU's move may have the unintended consequence of raising CU executives' profiles, ultimately leading to credit union representation elsewhere.
"Maybe not at the monetary policy level, but at the Fed bank level," Cates said.
Sainato agreed. "It may take some time to get someone [on the Fed], but I think it's moving in the right direction," he said.
