In this installment marking the fifth anniversary of HR 1151, two credit union league presidents who were members of the steering committee of the Campaign for Consumer Choice -Tom Griffiths of Iowa and Mike Mercer of Georgia-look back and share their thoughts.
What strikes you most as you look at where credit unions are now versus five years ago, just prior to the passage of the bill?
Griffiths: At that time, the major issue was something that happened to federal-chartered credit unions-the entire question of field of membership. Today, the banking industry is attacking state- chartered credit unions.
Mercer: As we anticipated, credit unions never again would be able to hide in the shadows of the financial services industry. Credit unions are consulted early and often in public policy debates on both the state and federal level.
Is there one moment you recall more than any other from the two-year fight for the bill?
Griffiths: The turning point of the entire campaign was Thanksgiving of 1997, at a round table meeting in Chicago. There were many representatives there from credit unions of all different sizes and types of charter. The participants wanted the major trade associations and the leagues to work in cooperation. Absent that, 1151 never would have been accomplished.
Mercer: The most dramatic moment was when Newt Gingrich announced his co- sponsorship of HR 1151 at the GAC. It was a tremendous emotional lift, and it led to dozens of other co- sponsorships in the House that same week.
Was there a particular piece of marketing or advertising, or a message that you recall?
Griffiths: There was nothing marketing- or advertising-wise, but the credit unions in this country sent a message that was terribly powerful -that there was complete unity by all credit unions. State credit unions, which were not particularly affected by the Supreme Court ruling, were lined up not at state capitals-where they usually did most of their lobbying-but at congressional offices. We let our opponents know that if they thought credit unions could be divided and conquered, they were badly mistaken.
Mercer: There wasn't one particular slogan or sound bite, but I do feel like we can't thank the banks enough for the free public relations they provided us. One of these years, we are going to have to send them a nice thank you card. And the gravy train goes on-I can't believe they're not done contrasting their public perception with ours.
Tell us about the very early days of the Campaign, your becoming involved, and what the Executive Committee was discussing?
Griffiths: I became involved after the Thanksgiving 1997 meeting that came up with the idea of a seven-member task force. At that time, I was chairman of the Association of Credit Union League Executives. The first issues we discussed when I joined the committee were fundraising and how the task force would be overseen. We decided that, instead of having a static chairman, the two trade association chairmen would alternate overseeing meetings.
Mercer: My most memorable moment was at the GAC one year before Newt Gingrich announced his co- sponsorship. At that time, I learned there was pressure mounting in credit union leadership to introduce a bill. Specifically, people wanted a California Democrat to introduce the legislation. I knew that was wrong, so I went with one of our government affairs people to meet with Gingrich. I told him the plan and asked for his advice. He stared at me for a minute and said, 'You can do that if you want, but the bill probably will fail.' As cool as I could act, I said, 'I thought so. So what can we do?' He got on the phone, and within 15 minutes it was determined that Steven LaTourette would introduce the bill, with support from four Republican committee chairs.
What was your experience in lobbying elected officials prior to the Campaign, and how did it change or evolve?
Griffiths: As president of the Iowa league since 1985, I had experience lobbying in Washington before the campaign. What changed was the intensity. I spent a great deal of time in D.C., and more time in congressional offices.
Mercer: The Georgia league had good relationships with everyone in the Georgia delegation. Gingrich and others with the Georgia delegation were the authors of the "Contract With America" when the Republicans took control of the House in 1994. When HR 1151 came along, instead of speaking in generalities about credit unions with these people, we had something specific to talk about, so the intensity of the contacts jumped up several notches.
What do you recall of your interaction with members of Congress?
Griffiths: Jim Leach, who was from Iowa, was the chairman of the House Banking Committee. The entire Iowa delegation was highly supportive of HR 1151 for two reasons: One, it was a good cause, and a clearly just cause, and two, it got state-chartered credit unions to step forward and make a lot of grassroots contacts with Congress on behalf of their federal-chartered brothers.
Mercer: We had daily contact, especially with Gingrich's office.
How much of your time was consumed by being a member of the Campaign, and how did you work that out with your league?
Griffiths: It worked out fine because I had, and continue to have, a very supportive board and member credit unions. This cause transcended anyone's worries about where I was and what I was doing. I spent about half my time on the Campaign.
Mercer: The league is entrusted with the operating environment for credit unions, and nothing was more important than the threat facing that environment. It was an all-consuming task-not just for me, but also for several members of my staff at the league.
At the time the bill was signed , did you have any inkling of the growth in FOM and overlaps that credit unions would see?
Griffiths: Yes. The lawsuit that led to the Supreme Court decision was meant to slow down or stop the trend towards more open FOM. Once 1151 was in place, there was no reason to believe that the trend towards more open and aggressive membership policies would not continue.
Mercer: I thought we would have grown even more than we have. We've had strong growth, and I'm not dissatisfied, but I wouldn't have been surprised by a decade of 15% growth each year. One thing that might affect growth here in Georgia is we have had several purges of inactive accounts- in some cases thousands of accounts-so that might be holding our numbers down a bit.
In retrospect, did credit unions compromise too much in accepting some of the limitations included in HR 1151, such as the MBL cap?
Griffiths: My response is a qualified no. It was a tremendously unfortunate circumstance that we were forced to accept some of these limitations- especially for state charters. But, if you take a look at the alternative, the limitations were necessary for the greater good. The other option was death.
Mercer: That happened in the Senate Banking Committee. You can always play Monday Morning Quarterback, but we were holding our breath when the bill was in that committee. We had to make a judgment-is it worth having the legislation stopped in the committee by trying to hold out? I don't recall people saying at the time that the compromise was too much. If anyone is saying that now, then they weren't there and were not up close and personal with the situation. Rather than play Monday Morning Quarterback, it is best to move ahead and look at ways to change or work around those things that confine us.
How did the experience change you?
Griffiths: While I thought it was painful, stressful and difficult at the time, some day, when I'm retired, I will look back at it as a very privileged time in my career. There is nothing like a feeling of great accomplishment.
Mercer: It made it clear to me that credit unions needed to change their emphasis on governmental influence.
Are CUs so focused on Washington that they are under-represented in state capitals?
Griffiths: No. I think in the very near future, you will see a renewed emphasis on resources provided to state capitals because there is an orchestrated, coordinated effort by banks in state capitals to restrict credit unions (and) then move that up to the federal level.
Mercer: I don't think credit unions are under-represented in state capitals because of our efforts in Washington. In fact, our federal level experience has strengthened our lobbying at the state level. However, we must recognize that community banks have a long practice of being active in local politics, and credit unions do not. Local politics has a greater impact on the state level than at the federal level.
What does the future hold for credit unions and the tax exemption?
Griffiths: They only way the tax exemption would go away is if credit unions either lose vigilance or unity of purpose. As long as credit unions remain united in their lobbying efforts, they will prevail. The only way to lose is if the banking community divides us. The next five to 10 years will be more of the same-a reliance on technology, and a movement towards fewer, larger institutions. That doesn't mean small credit unions are going away-there always will be a need for niche credit unions. As long as credit unions can walk into Congress and say, "We are who we've always said we are," and as long as the image of difference between credit unions and banks remains, we will be fine.
Mercer: The wherewithal and responsibility for cooperation and forging consensus is landing heavier on the very large credit unions. In order to remain tax-exempt, we will have to rely on two things: One, staying strong with the political action process, and two, we must back up our assertion that we are non-profit and motivated to serve people ahead of making profit.
The wild card of the taxation issue is one year we could have genuine tax reform, such as a flat tax or a consumption tax of some sort. If so, it would be difficult to believe that if, for example, the mortgage interest deduction were on the table, that the CU tax exemption won't be on the table.