One Guy In Washington With Some Good Advice

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As always, it will be an impressive line-up of speakers addressing CUNA's GAC this week. But the speaker credit unions would benefit most from hearing won't be there-Donald Rumsfeld.

The Defense Secretary needs to be on hand for two reasons: 1) I would like to see if I might elicit from him one of his now-famous pained and anguished looks of exasperation at the stupidity of the question, and 2) he is attempting to do with an entrenched military establishment exactly what needs to be done with credit unions right now.

Since taking office, Rumsfeld has swum against a strong tide by seeking to transform a military command forged in the War College lessons of the Cold War, where the mindset is one of large, heavily supplied forces and divisions between the various military branches. Rumsfeld wants the military to become lighter and quicker and to be prepared to fight as a unified team against loosely-knit "armies" that form and disperse like ants at a picnic.

That, Rumsfeld believes, is the essence of 21st century conflict. And that type of evolution, Rumsfeld would no doubt argue, is precisely what has happened in the battle between banks and credit unions.

For decades bankers sent an army in three-pieced fatigues to Capitol Hill to ask for favors and to lament the "unlevel playing field," and for decades credit unions responded with armies of their own on Capitol Hill, usually surrounding the major meetings such as GAC and NAFCU's Congressional Caucus. It all culminated in the now landmark (and centralized) war of 1998, when credit unions won their overwhelming victory on HR 1151. Vowing "never again," credit unions looked to the fight just finished and built a huge Washington operation. CUNA kept its digs in Madison, Wis., but it's officially a Washington-based organization now with an effective former congressman at the helm. It moved its offices to Pennsylvania Avenue and closer to Congress, and raised millions to build Credit Union House just blocks from the capitol. In short, credit unions have become a Washington power.

Too bad that's not where the fight is. Secretary Rumsfeld has encountered a Defense Department raised on one enemy (USSR) and accustomed to monitoring one place (Moscow). Credit unions have spent the better part of a century focused on one group (American Bankers Association) in one place (Washington). Rumsfeld recognizes the new battles will be in places like Kabul and Baghdad and Pyongyang. Credit unions have been slow to realize their new fights will be in places like Des Moines and Salt Lake City and Helena. (On page 37, CUNA CEO Dan Mica makes clear the trade group also sees the changing battlefield).

As this and previous issues of The Credit Union Journal have made very clear, banks are winning in many state capitols. They've succeeded with strong Tax-The-Credit-Unions initiatives in Utah and Iowa, and state bankers associations all over the country are telling their respective legislatures (as soon as they're done asking for tax breaks for themselves) that a great way to fix those state budget deficits would be to tap those tax-dodging little co-ops-which, if you haven't noticed, Mr. Part-Time Representative, aren't so little anymore.

There's another unavoidable similarity between world events and the world of credit unions. President Bush and especially Secretary of State Colin Powell have been on a different type of offensive-a war of words and public discourse seeking to explain why the U.S. believes Iraq is a threat to this country and the world. Critics argue that the U.S. hasn't done a very good job of articulating its case.

For years, I've used this space to point out that among the worst spokespersons for credit unions are-credit unions. Credit unions have made a low priority out of explaining to members and prospective members just what a credit union is-even though it's all that makes them different from banks. Many have opined that all that philosophy and democracy and member-owner stuff is hopelessly cornball and obsolete. The Credit Union Journal continues to receive press releases on a weekly basis from CUs referring to members as customers, because, after all, nothing says affinity and skin-in-the-game quite like "customer." As I mentioned a few weeks back, too, we received another release from a Michigan CU that referred to a new branch as part of a "chain." "Customers" of a "chain!" They'll lobby on your behalf, alright, just as soon as they're done lobbying on behalf of Taco Bell.

A few years ago I was listening to the president of an Australian trade group talk about why members would vote in favor of converting their CU to a bank just for the sake of a few bucks. With regret-and also with great insight-he observed, "We failed to engage our members as owners."

The credit unions gathered in Washington this week will be one big, cohesive army. They've hired big guns. The guns are trained on Congress. Yet there's no real fight there. The credit union fight of the future requires 50 smaller forces with their smaller weapons trained on the respective statehouses. It will require some entrenched power bases to give them up. It will demand fewer folks with skills in chatting up senators and more folks with skills in engaging members as owners.

All Secretary Rumsfeld has to do is overhaul a department with several million people and a $400-billion budget. All credit unions need to do is change their way of thinking. Given the choice, Rumsfeld would probably stick with the Defense Department. His job is easier.

Frank J. Diekmann is editor of The Credit Union Journal. He can be reached at fdiekmann

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