With the fifth anniversary of HR 1151 being signed into law coming up, The Credit Union Journal asked members of the Oversight Task Force of what became the Credit Union Campaign for Consumer Choice to share their insights into the flurry of activity that lead to the passage and signing of the Credit Union Membership Access Act and how their part in this piece of credit union history has changed them-and the movement itself-going forward. In this first installment of the series, two CEOs who were chosen because they were affiliated with both CUNA and NAFCU, share their experiences during those fateful days.
1. 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?
Randy Smith, CEO, Randolph Brooks FCU, Universal City, Texas
Credit unions are more politically active now because we know that consumers can lose freedom of choice by the stroke of a judge's, governor's, president's or regulator's pen. HR 1151 gave the Credit Union Movement-and note that 1151, while not specifically stating so, made this term a proper noun-a strong sense of validation. Validation not only in our right to provide CU benefits to the current members, but also in our right to bring these benefits to the millions of Americans who were underserved and "un-served" by the banking establishment.
Kevin Foster-Keddie, CEO of Washington State Employees' CU, Olympia, Wash.
The explosive growth in field of membership. Fields of membership have changed dramatically at the state level, but that was as a result of federal legislation that gave approval to this expansion. There has been significant growth in field of membership and changes to community charters, especially in certain states such as Washington and California.
If you look at the history of credit unions, after major political events- such as changes in laws or regulations-there frequently is a corresponding impact in the economic fortunes of credit unions. In another five years, credit unions will continue to grow, and HR 1151 will continue to be seen as an important watershed.
2. Is there one moment you recall more than any other in the two-year fight leading up to the passage of the bill, and why do you recall it? Was there such a thing to you as a "turning point" in the effort to get legislation passed?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
We couldn't talk about it at the time, but when Newt Gingrich began helping behind the scenes, that gave us great momentum. The credit unions in Georgia had helped him in his re-election campaign, and he remembered that and was a credit union supporter. Traditionally, credit unions have been more closely aligned with the Democratic Party than the Republican Party. If certain Democrats had become aware of Gingrich's support during crucial negotiations, it might have compromised our position.
The public turning point was getting co-sponsors, Steven LaTourette and Paul Kanjorski. It was touch and go for a while, and Congressmen LaTourette and Kanjorski showed a lot of leadership when they stepped forward to support us.
Randy Smith, CEO, Randolph Brooks FCU
The one moment that stands out in my mind is being at the CUNA GAC when the Supreme Court decision was decided 5-4 against us. It was terrible news. Then, Speaker of the House Newt Gingrich came on stage and announced that he was co-sponsoring the bill. The audience went wild, and for good reason. Many people played many roles in getting 1151 passed, but it took Newt to get the snowball rolling. He told me several years later that his co-sponsorship "was the right thing to do."
3. While much of the Campaign was intensely public, is there anything that you can share now that happened "behind the scenes" amongst the steering committee that isn't well known?
Randy Smith, CEO, Randolph Brooks FCU
Leading up to the formation of the Oversight Task Force, the battle for survival was fragmented and, in some respects, amateurish. What most people don't realize is that once the trades and their supporters realized the magnitude of the challenges, and all agreed to work as a team, CUNA and NAFCU did work as a team. These associations hired the best people to work the issues and their professionalism was impressive. Both Dan Mica and Ken Robinson brought unique skills to the table and these men will be remembered for their contributions.
Kevin Foster-Keddie, CEO of Washington State Employees' CU
Besides Newt Gingrich's involvement, there was a tragic event that people didn't talk about. Money always was an issue for the campaign, and, after much debate, we decided to buy national TV advertising. The week Princess Diana died, our commercials were on CNN. That was before there were many other choices for "wall-to-wall" coverage, so everyone was glued to CNN and our ratings that week were very high. Millions of people saw our message.
4. Out of all that came out of the Campaign, was there a particular piece of marketing or advertising, or a message that you thought was really creative and powerful?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
The powerful part was television. The CNN exposure was big, because credit unions at that time had rarely bought national TV time. The other success was the engagement of a top public relations firm. They coordinated the training of media skills to ordinary credit union folks who became excellent spokespeople for our issues. Those appearances on TV and radio news shows helped us. It showed me how powerful a PR campaign can be, and how cost-effective it is.
Randy Smith, CEO, Randolph Brooks FCU
As to marketing, the classic campaign logo and the message that the consumer had a "right to choose" were our most effective marketing symbols. I also recall a powerful TV ad that we ran. This ad just happened to run during the time much of America was watching the aftermath of Princess Diana's death. Since millions of Americans were watching our ads, we received a tremendous positive response to our message.
5. Tell us about the very early days of the Campaign for Consumer Choice, your becoming involved, and what the Executive Committee was discussing?
Randy Smith, CEO, Randolph Brooks FCU
In the early days, the two trades were organizing separate campaigns. At a CUES meeting, a group of CEOs-many of them members of both associations-decided that it would not be effective or efficient to try to fix the problem two different ways. The major players then had a meeting in Chicago to decide on one game plan. Mike Kitchen, of CUNA Mutual, was a major, behind-the-scenes player in getting a coordinated effort organized and funded. The two trades decided to form what became the Oversight Task Force, whose mission was to "oversee" the campaign. It was decided to include two CEOs who belonged to both trades. My name was one drawn out of a hat and Kevin Foster-Keddie was the other CEO.
Kevin Foster-Keddie, CEO of Washington State Employees' CU
I was on vacation, sleeping in, when my kids woke me up and said I had a call from Pete DiSilvester, who has since passed away. He asked me to be on a task force and, though still groggy, I agreed, though I didn't know what it was about. When I got to work the next day, I had 20 messages, which told me it was something pretty big. I think Pete recommended me because the leadership at both NAFCU and CUNA had worked with me before.
The early focus was on the Supreme Court case. We were gathering donations and trying to keep the NAFCU and CUNA people under the same tent and not worry about trade group politics. When we lost the case it was a big blow, so the focus shifted to getting the legislation passed.
6. What was your experience in lobbying elected officials prior to the Campaign, and did it change or evolve once you were more involved?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
It changed greatly. I had done a little lobbying before, but not much. I think I began to understand the process better. Elected officials have a lot on their plate. They want you to be quick and get to the point. They don't want you to waste their time, and you certainly should not get up on a soapbox and preach to them. Tell them what the issue is, and why it is important to their constituents.
We used a professional lobbyist, who was able to open many doors we would not have been able to get open otherwise.
Randy Smith, CEO, Randolph Brooks FCU
My experience in lobbying elected officials was practically nil. My credit union, I am sorry to say, just didn't get involved in politics. In retrospect, I guess you could say we were just riding on the coattails of many others, but no more. Through trial and error-and lots of good feedback from CUNA and NAFCU-a number of our folks and many others from across the U.S. have become effective representatives for the cause.
In recent years, we have had elected officials call us to get advice on pending legislation and we are welcomed when we go to Washington. This is a 180-degree turnaround from the old days of pre- 1151. Probably no surprise, but we also are regularly asked to help with fund raising-and we do this gladly. Also, we encourage our members to help elect credit union-friendly politicians via the "Deduct a Buck" program. Prior to the bankers' attacks, we would not have considered asking members for financial support to politicians.
7. What do you recall of your interaction with members of Congress?
Randy Smith, CEO, Randolph Brooks FCU
Most of our contacts were with staffers. They mostly were young people who were generally uninformed as to credit union issues. They knew about credit unions only because they cashed their checks at the House or Senate credit unions, but they really did not understand the Credit Union Movement. However, these young folks were willing to listen and learn and they wanted to do the right thing for the American people. Many were put off by the arrogance of the banking establishment. We heard comments such as "When the bankers come to D.C., they bring their lawyers; when you come, you bring real people."
We also heard over and over how the bankers would stretch the truth to make their case look better, while our side presented only facts. In fact, we were very careful to be honest and open in all our dealings-just like we do when dealing with our members back home. In many cases, the bankers lost credibility on Capitol Hill because their message was not always seen as being fair or truthful.
I recall one senator who told us not to try to introduce a bill until the Supreme Court had rendered its decision. This senator warned that a bill would lead to a "Christmas tree" that could have anything on it. Had we listened to that advice, we would have ended up in terrible straits. We would have lost months, perhaps years in our goal to get 1151 passed. Our goal all along was to have a dual track-fix the problem in the courts if possible and fix it in the legislature if necessary-and have both balls in the air at the same time.
The grass roots movement also was a winner in congress. We had hundreds of thousands of people calling and writing to their representatives. I had one eighty-something grandmother from Dallas write me that she was going door to door in her neighborhood getting signatures on a petition to help her credit union. At the same time, I had bank customers tell me they would go into banks and pick up the anti-CU literature and trash it. We also had bank employees feed us information from their employers. We learned that banks were holding training sessions to educate their employees as to how to harm credit unions. All of these stories helped energize our side and we were determined to defeat the enemies of freedom of choice.
Kevin Foster-Keddie, CEO of Washington State Employees' CU
They were very polite, which impressed me. Also, they were very aware of the potential power the credit union movement had. The bankers had more money, but when members started calling the lawmakers' offices, that made an impression. They listened to the votes, not the money.
8. How much of your time was consumed by being a member of the Campaign, and how did you work that out with your credit union?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
I ended up leaving my credit union, so what does that tell you? I had seen mentors of mine get involved with political action-and how their jobs suffered as a result-so that was a concern of mine. Boards of directors have legitimate concerns regarding activities outside of work. I spent a fair amount of time, but the problem was not so much the hours as the perception of the hours. Week after week, when the CEO's picture appears in trade publications or on television, they start to believe he is spending too much time away from the credit union.
Randy Smith, CEO, Randolph Brooks FCU
My board recognized early on that this was a major project and they gave me all the time I needed to participate. It did take many hours of my time and many hours of others in my credit union. Fortunately, our CU has a highly skilled senior staff that takes care of the business. In fact, they don't need me, but do not tell my board that.
If the bankers had been granted all the relief they asked for, our credit union would have had to expel tens of thousands of members and that would have led to laying off hundreds of employees and closing branches. We had no choice but to fight. During the discussions among credit union leaders of how much to set aside to fund the fight, I regularly ran into bean counters who were trying to fight on the cheap. I would ask them, "How much is your credit union worth? Is it worth one month's net income? Three months? A year's net income?" The answer as to funding and as to time commitment was: give all that is necessary to win the war. Even if you waste some, so what? Freedom of Choice is not free.
9. At the time the bill was signed by the president, did you have any inkling of the growth in field of membership and overlaps that credit unions would see?
Randy Smith, CEO, Randolph Brooks FCU
HR 1151 was not about growth; it was about survival. Much to the bankers' dismay, their lawsuits then-and continuing to this day-do nothing but highlight what a great deal consumers have when they select a credit union to do business with. I know a number of bankers and they sometimes jab me about the "benefits" we credit union people have. My answer is: "If you think credit unions have such a great deal, there is a procedure to convert your bank to a credit union." After a few blank stares, the reply is usually something like: "But I wouldn't have my stock options." That is true: if you want to play football, you use a rulebook that is different from basketball. The choice is yours.
Interestingly, the bankers' complaining about credit unions has led to tremendous consumer interest. Day after day, people come into our CU and say they are fed up with the treatment that the for- profit institutions provide. People like to be treated like family, and at credit unions, they are.
As to overlaps: for many years in our market area, credit unions have shared fields of membership. The winner is the consumer. I am all for wide open choice, even when it means that I have to get up earlier to find better member service solutions.
Kevin Foster-Keddie, CEO of Washington State Employees' CU
Yes. I felt it would be explosive, so it was not unexpected.
10. In retrospect, did credit unions compromise too much in accepting some of the limitations included in HR 1151, such as the cap on member business loans?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
I don't think we did, though there has been lots of debate on this topic. With 20/20 hindsight, some say, "With a little more fortitude, you could have stuck to your guns." But we had experienced leaders like Dan Mica and Ken Robinson involved. We listened to lobbyists, members of Congress and other people who were very familiar with the process. We decided getting HR 1151 passed was life or death for credit unions, but business loans were not. We thought we could deal with business loans later as a separate issue, but we couldn't risk not getting the legislation passed.
Randy Smith, CEO, Randolph Brooks FCU
Credit unions had little choice but to compromise. We were told several times in several ways: "Take this bill or leave it." Two critical votes were won by only one vote because we were dealing from a position of weakness. Today, we are much stronger and elected officials listen more frequently. Some say that we should not have accepted the bill with limitations on business lending; some will complain about the PCA provisions. There is no perfect bill, just as there are no perfect cars, perfect houses, or perfect marriages. Overall, the bill was a tremendous win. We won the right to continue to exist and grow, we also were granted in law the right to have the "once a member, always a member" policy if our board so decided. In retrospect, few credit unions were actually harmed by 1151; thousands were helped. And, as a result, credit unions have grown from 70 million members to some 83 million.
Adding more members, taking bold steps like building Credit Union House on Capitol Hill, teaching people how to run for office, Hike the Hill programs, and other innovations all add to our political strength. Growing the CU Movement is a process, and with us in a stronger position today than we were in five years ago, we should be able to improve the Federal Credit Union Act and various state laws.
11. How did the experience change you?
Randy Smith, CEO, Randolph Brooks FCU
The experience was a privilege. I got to work with some very smart, dedicated people who taught me about organization, public relations, teamwork, goal setting and doing the right thing for the right reason. Most of all, I was at the right place at the right time to participate in a cause that was just and moral and the Credit Union Movement won. What could be better than that?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
It was a great developmental experience. I have a better understanding of how the political process works. I've told my children, and I have spoken to young people in schools about the experience and what a great civics lesson it was. Two sides with opposing viewpoints go to the Supreme Court, then credit unions resolve the issue by passing national legislation. It was a chance to see our democracy in action.
12. Do you feel there is danger in that credit unions have become so focused on Washington that they are under- represented in state capitals?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
No, certainly not in my state. We have a great relationship with the political leadership in our state capital. I am more familiar with issues on the West Coast, but I do know the banking lobby is stronger in different states, especially in the East. Historical circumstances related to the evolution of each state have more to do with under-representation than a focus on the national level. If anything, credit unions need to increase their involvement at the national level.
Randy Smith, CEO, Randolph Brooks FCU
Credit unions are not just focused on D.C. From what I have seen, the states are the incubators for many new laws. Many of these spread. During the Supreme Court hearing, one justice asked how the states handled a credit union issue. What happens in Sacramento, Charleston, and Austin matters in Washington, and vice versa. Credit unions, whether state or federally chartered, must keep an eye on the state houses and our friends in D.C. And with the help of the trades, we do.
13. What do you believe the next five to 10 years hold for credit unions, and what about the status of the tax exemption?
Kevin Foster-Keddie, CEO of Washington State Employees' CU
On the tax exemption-I am in the minority, but I don't see it as a real threat. We have to be diligent, but we have the votes and we have proved that time and again. The bigger threat to me is credit unions converting to bank charters. I believe this is the most serious threat to our movement for a variety of reasons.
Randy Smith, CEO, Randolph Brooks FCU
The future looks bright for credit unions. Consumers value what we do for them. I see us becoming a larger player in the financial services arena, I see us doing more things to help more people. Perhaps one day we will help members save on their electricity bills by showing them the alternatives available under electric utility deregulation-we already know how to settle accounts electronically. I see us reaching out to the unbanked; to those people one of my banker friends said he didn't want "clogging up" his lobbies. I see us becoming the place members turn to first for advice regarding a range of issues.
As for tax the exemption, the bankers will never give up on that. They will keep cutting their tax bills while trying to impose double taxation on us. They will do anything they can to try to restrict the consumer's right to choose. Why else do they file these lawsuits that attack the meaning of one word? Why else would they have non-qualified "testers" try to join a credit union when they know they are not eligible for membership? The banking establishment has a black eye from attacking consumers and from being greedy when it comes to asking for special legislative favors, and, with some notable exceptions, most banks are not improving their image with consumers or lawmakers.
With the bankers behaving so badly, we should prosper. Stick around for the ride.
