In 1998, Dan Mica was relatively new not just to CUNA but to credit unions AFCU President Ken Robinson, now retired, was a long-time veteran of the group that has been a rival to CUNA for even longer. But both were thrown together by events of the time and the threat to credit unions in the courts in Congress.
Below is the last installment in a four-part series highlighting the recollections of those involved in the Campaign for Consumer Choice as the Credit Union Membership Access Act marks its fifth anniversary.
1. What strikes you most as you look at where credit unions are now versus five years ago?
Robinson: Five years ago was a very worrisome time for credit unions CUA was plowing new ground for fields of membership but application and approval procedures were awkward and not easily understood; we had lost our case before the Supreme Court and didn't know if NCUA's new field of membership procedures would be invalidated; we had trouble finding members of Congress who would co-sponsor our bill and we had no accurate sense of how much or strong our support was in Congress. On a larger scale the Congress and public was still smarting and leery of financial institutions because of s&l-bank failures in the late 80s and early 90s ow all of those worries have passed.
Today there is a high degree of awareness of credit unions, and the purpose they serve, in the public as well as in the administration and in the Congress. Today both the Federal Reserve and the Treasury Department accord credit unions a much bigger role in the national economy and payment systems than they used to. And credit unions have a much broader menu of services and products to meet the needs of members. Business confidence, acumen and acceptance by the public is much higher today than five years ago.
Mica: I have often said that five years ago credit unions were a mile wide-but only an inch deep. What I meant was that credit unions had many willing hands to be lent to protecting our unique financial institutions, but those hands were somewhat inexperienced in dealing with the political realities of effectively protecting credit unions. Five years ago, CUNA vowed "never again." Our goal was to become a mile wide and a mile deep.
Today, I feel credit unions have made much progress. We may not be exactly a mile deep, but we are well on our way. The depth that we have achieved is attributable to the many programs and projects CUNA and the leagues have instituted over the last half decade-all in an effort to deepen the political effectiveness of credit unions.
Credit Union House, a joint project between CUNA and the various state credit union leagues, is the home of credit unions on Capitol Hill. During our struggle to pass HR 1151, we bounced from location to location to set up our headquarters to shepherd the bill through, first, the House, and then the Senate. We learned that we needed a permanent presence for future battles. So, we raised the money, we bought the land, we constructed the building from the ground up. In the fall of 2001, we opened the doors of Credit Union House-and CUs had a home on Capitol Hill.
Credit Union House serves as our base of operations for another program we started in the aftermath of HR 1151, designed to raise the profile of credit union people before Congress. Today, our Hike the Hill program maintains a regular drumbeat as credit union representatives travel to Washington-up to three times a year-to visit their members of Congress. This year, more than three-dozen states will be sending Hill hikers to Washington o longer are credit unions faceless in Washington.
We know that credit unions' ability to energize the grassroots- their memberships-was a key factor of success in HR 1151. That hasn't been lost on us. But strong grassroots has be to combined with strong political programs-and we have used the last five years to build a solid foundation of a well-operating political program. Today, working through the leagues in partnership with many CUNA programs, credit unions are more energized than ever:
* Our PAC has grown three-fold in the last five years, becoming one of the top 20 in the nation.
Through programs such as "key contacts" credit union representatives develop long-term, helpful relationships with their federal legislators.
* Our "Project Differentiation" program demonstrates the unique contribution to the financial services system made by credit unions by outlining-in writing- just how credit unions serve their members and communities. Today, more than 1,300 credit unions are involved.
* Our "Project Zip Code" program helps credit unions identify their total numbers of members in any congressional district. To date, the program has pin-pointed nearly 36 million credit union members by congressional district-nearly half of the entire credit union membership nationwide.
* Campaign schools help us build relationships with potential members of Congress, and potential state legislators, by training credit union-friendly candidates in the arts of running a successful campaign.
* Our "Political, Legislative Action Network" outlines nine steps for credit unions to use in achieving political effectiveness.
What strikes me the most is that credit unions have come such a long way-and are still working at it, every day.
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?
Mica: Newt Gingrich telling 3,500 credit union people at the 1998 GAC that he would, indeed, sign on as a co-sponsor to HR 1151. There were two key points about that announcement. First, it is very unusual- although not unheard of-for a sitting Speaker of the House to announce support for a pending piece of legislation. By doing so, Speaker Gingrich signaled his very strong support for our bill. Secondly, the Speaker's announcement came the day before the Supreme Court publicly rendered its decision in the AT&T Family FCU case. Although we lost that decision and were deeply disappointed, we were at the same time buoyed by the Speaker's support announced a day earlier. The Gingrich announcement, coupled with the publicity surrounding the Court's decision, opened the floodgates for more congressional support for our bill. In fact, that week (even the next four weeks) were just a blur after the Speaker's announcement. But one thing we all remembered-we really had a chance to win.
Robinson: Dan Mica and I had a meeting with Newt Gingrich. We ex-plained the issue and he bought into our explanation. Shortly thereafter Congressmen Paul Kanjorski and Steve Latourette came on board. After that we picked up momentum.
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?
Robinson: Mike Kitchen and CUNA Mutual played a very important and unpublicized role in getting the campaign started and funded. Mike pledged the first sizable contribution to get the ball rolling, while CUNA and NAFCU set up their programs to gather financial support for the campaign. The Steering Committee, made up mostly of delegates who were members of both CUNA and NAFCU, kept the campaign on an even keel and devoid of domination by either party. The committee also kept an eye on finances to ensure that campaign expenditures were prudent and within resources available.
Mica: Suffice it to say that there was always vigorous-and healthy-discussion about the issues at hand. That discussion typically included: the best way to address current problems; prudent use of the resources available to us; how to deal with future challenges; delivering the best campaign possible to achieve results.
Aside from that, I would point to the transition our vice chairman, Buck Levins, was forced to make in the difficult days following the death of our chairman, Pete DiSylvester. Pete's tragic passing came just as we were getting ready for the Governmental Affairs Conference to get underway in 1997. In terms of the campaign, his death was especially a blow to us all in that Pete had been a leader in developing the Oversight Task Force and guiding CUNA and credit unions to pursuing a united front for the Campaign. However, Buck stepped immediately into the role ssentially, the transition was seamless. Buck deserves a huge amount of credit for making this happen, dedicating himself to maintaining a united front-and, indeed, building on that approach in the months to come for the most effective campaign possible. Pete's death was a sorrowful occurrence; but Buck's leadership-especially in those first days-was truly uplifting. Those of us on the inside witnessed it and were definitely inspired by it.
4. Out of all that came out of the Campaign, there a particular piece of marketing or advertising that you thought was really creative and powerful?
Mica: The "hot dog" vendor, I believe, was the most memorable. The ad, however, was not sponsored by the campaign, but by one of our partners-the Small Business Survival Committee. I believe that ad played a key role in protecting credit unions' ability to make business loans.
The ad, which features a hot dog vendor from Maryland who also happens to be a credit union member-urges members of Congress to oppose limiting credit union member business loans. Headlined, "Frank Talk about Credit Union Business Loans," the ad features Wendell Sisler, a member of Chesapeake Family FCU. "I got let go in 1993 from my job," Sisler states in the ad. "I decided to start a hot dog business. Being unemployed and collecting unemployment, the chances of a bank lending me money was slim. But my credit union did. Thanks to them, my hot dog business was successful. I repaid my start-up loan. But I can never really repay my credit union for believing in me."
What made this ad especially cogent was that it used a real person-and came on the heels of an ad sponsored by the bankers that used a model, posing as a hot dog vendor, decrying credit union business loans. Our ad, I believe, convinced many to ignore the bankers' entreaties to impose strict limits on business lending. Although Congress, in the end, imposed some restrictions on CUs, I do think it would have been far worse had we not developed the message we did in this ad.
Tell us about the very early days of the Campaign for Consumer Choice, your becoming involved, and what the Executive Committee was discussing?
Robinson: Our major challenge in the early days of the campaign was coordination among the participants. Information and money was coming from all directions. We needed one voice (or at least a coordinated voice) on the Hill, one treasury, one business plan and one staff. Again, Mike Kitchen gave us a big help by providing Larry Blanchard to head the staff.
Mica: Unity of purpose within the movement was the top issue in the very earliest days of the campaign. We knew that, unless we all stood together, there was a very real danger we could all meet our demise together. That was critical, especially when it came to the legislative and legal issues that were before us.
A second key issue was funding in the early days. We knew what we would be up against on Capitol Hill-the banking industry's deep pockets. We also knew that there was a great deal to be done, particularly in message development, gathering of intelligence, setting a strategy, etc.. In order to make this Campaign successful-we knew we had to solidify our fund-raising efforts.
I think we were successful in addressing both of these immediate concerns, coming up with a 'dual-track' approach, addressing the legal and legislative sides simultaneously, and developing a fundraising campaign that credit unions believed and supported.
What was your experience in lobbying elected officials prior to the Campaign, and did it change or evolve once you were more involved?
Robinson: In the normal course of events I visited most members of the House and Senate Banking Committees when financial issues important to credit unions were on the table.
Similarly, I visited with staff officers at Treasury and the Fed. I would describe those meetings as arms-length and formal. As HR 1151 progressed, however, the nature of our contacts became much more "shirtsleeve." It was not at all uncommon for Dan Mica and I to be at a table with Jim Leach, Chairman of the House Banking Committee and John LaFalce, Ranking Democratic Member of the same Committee working out explicit language. The NAFCU and CUNA staff worked with the Banking Committee staff more like a task force trying to accomplish a common goal rather than advocates or adversaries.
What do you recall of your interaction with members of Congress?
Robinson: I was impressed by the warmth, respect and attentiveness accorded us by members of Congress as we made our case and sought their support. It didn't hurt that most of them were members of either the Senate or Congressional credit unions. The Congressmen knew that nothing we were asking for would result in personal gain verything we were seeking would benefit consumers. Our opponents could not make the same claim.
Mica: It was constant.
At the time the bill was signed by the president, did you have any inkling of the growth in CU field of membership and overlaps?
Robinson: Yes. We knew that giving members a choice would lead to competition to provide better service and multiple membership in credit unions. But membership overall would grow. The pie would be bigger for everybody. Membership is not a zero-sum game.
Mica: I think it important to point out what this effort was all about-to restore to credit unions something that they had lost. The decision by the appeals court in 1996 meant that NCUA's policy of approving select employee groups (SEGs) was essentially invalid. The Supreme Court affirmed that loss for credit unions in its decision. Our effort in the Congress was to restore to credit unions the right to continue offering membership to small groups of employees. It was not to expand the powers of credit unions.
So, given that we were successful in restoring to credit unions a power and capability that they had earlier possessed, it did not in any way surprise me that credit unions re-established their efforts to build membership through SEGs. In fact, membership growth for all credit unions over the last 10 years actually peaked in 1994 at slightly more than 3%. In 2002, CUNA estimates that membership at credit unions expanded by only 2.2%-which is below the average annual growth for the last 20 years of 2.9%. Thus, it is arguable if the passage of HR 1151 really had a big impact on the membership growth of credit unions.
In retrospect, did credit unions compromise too much in accepting some of the limitations included in HR 1151, such as the MBL cap?
Mica: I would be careful to only consider such a retrospective through the lens of that particular moment in time, rather than through the lens of right now. Five years ago, the bankers were putting tremendous pressure on legislators to place limits on credit unions in the bill. In fact, in both the House and Senate committee markups of the legislation, just one vote separated the bill from being blocked indefinitely, or being passed onto the floor of the respective body for full consideration. The bankers' ultimate goal, of course, was to try and block the legislation completely-to make it so anathema to credit unions that credit unions could not and would not support it.
But this was an issue of survival; submitting to this tactic would have only guaranteed the demise of credit unions by guaranteeing the demise of the legislation. We could not let that happen. So, taking due notice of the realities, we worked on getting the best possible deal that we could in order to ensure that the bill became law (but without selling out credit unions). Our ultimate reasoning: We could address these issues again in the future.
And, in fact, we have and are doing just that. We have worked diligently to change the Small Business Administration's view of credit unions, allowing CUs to fully take part in the guaranteed loan program. The CUNA Renaissance Commission studied the needs and wants of credit unions in the wake of HR 1151, and developed a "vision" of what credit unions want to be. In fact, many of the 13 items contained in the Regulatory Relief legislation now pending in the House came directly from the Renaissance Commission's deliberations.
Is there more to be done? Yes, and CUNA continues to work today toward the best operating and regulatory environment for credit unions. And, five years ago, we were doing exactly the same thing.
Robinson: Legislation is not designed to give carte blanche authority to institutions where the public good is concerned. Credit unions had to accept some of the strictures placed on banks and s&ls, because credit unions are financial institutions dealing with the public. In a sense, we suffered because of the ills of the banks and s&ls that failed. Congress was in no mood to have any failures by any government-chartered institution.
We tried to hold firm on basic issues that were important to the largest number of credit unions. Business loans, for example, were such a small portion of credit union lending that we had a very difficult time persuading legislators that any restrictions would be an unacceptable burden.
How did the experience change you?
Mica: It truly changed my viewpoint as to the level of credit union preparedness in dealing with these sorts of challenges. While credit unions responded magnificently and diligently to the challenge before them, it was a gargantuan task. And we had to keep it going. But how?
Here's an example. Immediately following the campaign, in the fall of 1998, we continued to hear stories from lawmakers about the tenacity of credit union people in pursuing the campaign's goals. "Everywhere I went, there were credit union people," was the common refrain. It dawned on me then: To be ready for the next big challenge-regardless of what it is-we must maintain that spirit and that diligence.
That's why CUNA and the leagues developed the programs and political involvement plans that we did. We no longer accepted that we should keep our heads down and not make any waves. We had to be involved in the process; we had to have a voice; we had to be visibile. And, since the day that HR 1151 was signed into law, we have been working in exactly those directions.
Do you feel there is danger in that credit unions have become so focused on Washington that they are under-represented in state capitals?
Mica: One of the truly great lessons from five years ago was that we credit unions were not as strong in Washington as we thought we were-or as strong as we should be. Thus, we have put considerable effort into improving our capabilities here. Having said that, I have to also say that the leagues, in the meantime, have been doing a fabulous job on the state level in watching over credit unions' interests. Recent events, I strongly believe, support my view. In six states earlier this year, bankers attempted to enact legislation imposing some sort of tax on credit unions, typically larger credit unions. In all six states, the bankers were turned back from erasing the credit union tax exemption.
In Utah, the league faced a very difficult fight, in that the legislative fight was an "inside job;" supported and promoted by legislators with very close ties to the banking industry. That the Utah League of Credit Unions was able to stop the bankers from taxing large credit unions was a heroic task. What is true, however, is that the risk to credit unions is really just as great at the state level as it is at the federal level. In that sense, this past year may have been very good for all of us-reminding us to be vigilant at all levels.
What do you believe the next five to 10 years hold for credit unions, and what about the status of the tax exemption?
Robinson: I think credit unions, by their performance, have secured a strong and lasting position in the payments system. Congress has no incentive to change something that is working so well. We'll continue to see fewer credit unions with mostly very large and very small. The large will grow because they can adapt technology to operations and deliver a superior service at an increasingly lower cost. The small will survive because there will always be niches. The challenge at both ends will be to strike the right balance between doing well and doing good. You can't do one without the other. The tax exemption will endure absent some national circumstance that has nothing to do with credit unions per se but which leads to a big change in our nation's tax paradigm...adoption of a value added tax, for example. There's too much taxpayer grief and not enough financial gain for Congress to cancel the exemption.
Mica: I strongly believe that credit unions will hold on to their tax exemption-but only as long as credit unions are willing to work for it. We have to continue to maintain strong political action programs, visit legislators, have legislators visit our credit unions, volunteer in campaigns, run for office, keep legislators informed-everthing that we have been advocating for these past five years. The fact is, to be successful politically, you have to keep at it. You cannot afford to make an effort for a year a two, and just let it drop after that, thinking you have done enough. You have not.
More generally, I continue to hold that credit unions have a remarkable future ahead of them. Credit unions, with their emphasis on service to members over servicing the bottom line, are truly setting the standard for the delivery of financial services. More and more people everyday are becoming aware of that fact, and are increasingly looking to credit unions for their financial services needs.
But the real success of credit unions will not come as a result of political power or growth. Success for credit unions will be told in how well credit unions continue to be credit unions. That is: member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors with the specified mission of meeting the credit and savings needs of consumers.
As long as credit unions stick to those general parameters, I believe they will continue to be successful, and grow as a force in the financial services marketplace.
