WINSTON-SALEM, N.C.-Joe Trettel, president of Permatech, a business located here, admits he was "not into politics" until he was asked to participate in a Hike the Hill event in Washington earlier this year organized by the North Carolina CU League and CUNA.
Trettel's presence, and the credibility he brought as a small business owner, is reflective of how much better credit unions have become at lobbying in Washington.
Over the past decade credit unions have gone from being nearly voiceless in Washington to being, if not powerbrokers, players with a seat at the table.
The price for that seat is the millions of dollars in political action committee (PAC) funds credit unions now raise annually for both state and national races. But what are credit unions getting for all those dollars being donated to candidates and elected officials? The tax-exemption, of course, remains entrenched despite the federal deficits and banker attacks. But credit union priorities, such as an increase in the member business loan cap, continue to tread water in Congress, and cries of help to decrease the regulatory burden continue to fall on deaf ears.
In this issue Credit Union Journal talks to the two primary credit union trade associations and others involved in the lobbying process, including Trettel, about what, in credit union parlance, is the ROI for all the fundraising and grassroots support.
Trettel's appearance in Washington was part of a Hike the Hill aimed at building more support for a long-time credit union priority, an increase in the Member Business Lending (MBL) cap. Various pieces of legislation to increase the number of business loans credit unions can make have languished in Congress for more than a decade.
"The bill is all about job creation. My business peers would be dumbfounded that this bill is being held up due to politics," said Trettel. "Banks want to make it a battle with credit unions, but how many people are banks helping employ? Lending is about building the community."
TFCU Credited For Saving Company
Trettel credits his company's survival to Truliant Federal Credit Union in Winston-Salem, N.C., and he was glad to tell his story to members of Congress to prove the need for an increased lending cap. In a small piece of irony, it was a lawsuit filed in the early 1990s against what was then AT&T Family FCU (now Truliant), that eventually led to a Supreme Court decision on field of membership that went against credit unions and which was eventually overturned by Congress when it passed the Credit Union Membership Access Act. The cap on Member Business Lending was included in that legislation after the banking lobby succeeded in inserting the language in the bill.
"The community bank I worked with couldn't help me. I was going to go out of business," said Trettel, who explained he was trying to close an overseas business opportunity that would allow him to rehire employees laid off during the height of the recession. "Now we're growing and back to our employment levels before the recession-and it's because a credit union stepped in and studied our business when nobody else would."
Trettel said he participated in the Hike the Hill event because he "wanted the congressmen to see how it feels as a small business owner not to get the help you need-and I wanted them to know there are many other businesses out there that need loans like us to survive and grow."
Grassroots efforts like Hike the Hill do have an impact, according to Richard Gose, senior VP-political affairs with CUNA. "We have high creditability because of our membership," explained Gose. "The grassroots nature of credit union membership matters, because it helps Congress understand what members can do at the ballot box."
The Value of 'Partisan Communications'
CUNA has created a lobbying operation in the last 15 years that is miles ahead of where it was in the late 1990s. Today it encourages credit unions to participate in what is known as "partisan communications," where credit unions send mailings to their membership. These mailings advocate the election of candidates friendly to credit union issues in hotly contested Congressional districts.
CUNA then compliments those efforts with targeted donations to candidates and separate "independent expenditures." These consist of ads or other campaign activities that are funded by CUNA's PAC, the Credit Union Legislative Action Council (CULAC), and cannot be coordinated with a candidate's campaign, under federal PAC rules.
The key to competing with other large PACs is extensive research and targeting campaigns where CUNA can get the best bang for its buck, according to Trey Hawkins, vice president of political affairs for CUNA.
"We work hard to identify our strongest supporters. And we often get our best support from staff people who are setting committee rules. This is a major factor for us," added Hawkins.
Going Five For Seven
So how successful are the targeted donation efforts? CUNA said that in the 2010 election cycle it specifically targeted seven incumbents who were not friendly to credit union causes. Five of the seven incumbents lost to candidates supported by CUNA, and two of those were on the Financial Services Committee.
CUNA is less revealing about its forecast for the 2012 elections and where it plans to target its dollars. "Both parties have highly competitive races that we are watching," said Hawkins. "We challenge those candidates that have been hostile to credit unions, or won't engage in discussions with us."
The significant increase in the political action committee funds CUNA now has in its warchest is notable, but money alone doesn't make the difference, according to Pat Keefe, vice president of communications for CUNA. "PACs are one of many tools we use. More importantly, PACs are a tool to help set the table for credit unions to have a voice. They allow us to build relationships with people who are making the laws and set regulations for years to come."
Hawkins also strongly believes that the "strength in numbers" of credit union members gets attention. "Banks outrank credit unions 10 to one. But bank customers aren't willing to advocate for banks. People who do business with banks are customers. Credit unions have members. That makes a difference in getting people involved. Credit union members are more emotionally committed than bank customers."
John McKechnie of Total Spectrum, a Washington lobbying firm that works with credit unions, believes that over time, "you always do well when you can bring together money and people."
McKechnie, well known to credit unions for his long career in government advocacy at CUNA and then a more recent term at NCUA, pointed out that there is an average of more than 200,000 credit union members in each congressional district. The average number of votes each member of the House of Representatives receives in their district races is 140,000, he added, "so you can see the input credit union members can have on races."
The money flowing through PACs often gets negative attention, but McKechnie believes that should not be the case.
"Money has always been and will always be a part of politics," explained McKechnie. "Some people feel PACs are a dirty word. In fact, PACs represent reform. They came to be when old abuses came to a boiling point. As the Supreme Court once said about disclosing donations, 'Sunlight is the best disinfectant.'"
The Long, Long Road
McKechnie added that Total Spectrum's main focus is increasing business lending for credit unions, as well as preserving the federal tax exemption. Although action cannot ever come swiftly enough for credit unions, McKechnie believes that the approach of credit unions to Congress works over the longer term.
"Credit unions generally take a higher road than banks. Banks tend to be more adversarial; 'Pass our agenda, don't help credit unions.' You have to have sound policy reasons behind what you are advocating, and we believe we do," added McKechnie.
Across the Potomac, NAFCU said its No. 1 priority of its PAC is to "support candidates and members of Congress who understand and represent credit unions and their members," according to Patty Briotta, NAFCU's public relations manager.
"When you get a $5 contribution from a senior citizen who has their Social Security directly deposited to their local federal credit union, you take that very seriously," explained Briotta. "They contributed to NAFCU PAC because they trust their credit union and because they believe that we will use their contribution to help ensure their credit union's future and prosperity. That is what we strive to do when picking candidates to support."
Both CUNA and NAFCU say the involvement of credit unions and their members through grassroots efforts has become even more important to help legislators listen to credit union issues-even though progress of Congressional bills, including credit union priorities, often seems like it can be timed with a sundial.
It's Not Just Credit Unions
Dennis Pierce, CEO of CommunityAmerica Credit Union in Lenexa, Kan., can empathize with credit unions that get frustrated by the slow process of getting results.
"But it's not specific to credit union issues-they don't move faster for anybody else, either," said Pierce. "That helps me put the frustration with the political process in the right perspective. It's just difficult for Congress to reach agreement and move forward."
Pierce points to CommunityAmerica's backing of Kevin Yoder's successful run for office in Kansas' Third Congressional District as an example of building relationships for credit union causes. Rep. Yoder worked as an attorney for a law firm that represented another credit union in Kansas and was familiar with credit union issues. So CommunityAmerica did four mailings to its members in support of Yoder.
Pierce worked with CUNA staff members who reviewed CommunityAmerica's member files and ran them against party affiliation information so mailings would only go credit union members who were more likely to be supportive of Yoder's campaign. This was done to minimize any concern from members about CommunityAmerica's active participation in the campaign and, in fact, Pierce said he only received two complaints after four separate mailings to the 8,500 members who were selected to receive the pieces.
Since Yoder took office, Pierce said the congressman has been "very open to us and our issues and willing to listen to our point of view," in numerous meetings.
"You can't show up at the last minute and expect Congress to listen to your concerns," added Pierce. "I encourage other credit unions to build relationships and get engaged and hope that results in the support you need when you need their help."
Using Deduct-A-Buck
Laida Garcia, President and CEO of Florida Central Credit Union in Tampa, Fla., encourages credit union member PAC contributions through another CUNA innovation of the past 15 years, "Deduct-a-Buck," which is designed to tap the more than 90-million Americans who are credit union members for donations. In Florida Central's case, it features Deduct-A-Buck in its newsletters and online, and then turns those funds over to CUNA's PAC.
Is all that effort yielding any results? "I believe we're making progress but it's never as fast as we want," said Garcia. "But I always think how much worse it would be if we didn't have advocacy of critical issues to us."
Garcia points to credit union trade association efforts with the Federal Credit Card Interchange rules as an example of legislative success that many may have overlooked. She said trade association efforts helped delay implementation of what could have been "catastrophic" rules.
"The delay helped, even though it eventually passed, because credit union concerns were taken into account in the final legislation," said Garcia.
Not Sold On PACs
But not everyone is a proponent that the increased Washington presence and the bulging PAC funds are really delivering any ROI for credit unions, especially in tough economic times when dollars are scarce.
Dale Verderano, President and CEO of Matadors Community Credit Union in Chatsworth, Calif., noted his own credit union has opted not to affiliate with the state league and CUNA.
"Our decision was based on the cost, plus questioning what the trades believe in," explained Verderano. "When you look at the trades, I feel they are not always out for the best interests of all credit unions."
As an example, Verderano pointed to the fact that credit unions can only raise capital through retained earnings. "There's no way to raise alternative capital as a credit union. Shouldn't the associations be championing those credit unions that want to convert to mutual savings banks?" asked Verderano. "But this would leave associations out in the cold without credit unions filling their coffers."
Verderano said his decision not to be involved with the trade associations is even more pragmatic. "In this day and age, when credit unions are trying to cut all costs, it's simply hard to justify the investment in membership (for league/CUNA dues). How much money is going to causes that are critical to you and how much is going to other things that don't really help you?" said Verderano.
Hear The Concerns, But...
CUNA's Gose understands such concerns, but emphasizes, "The credit union system is strongest when we are united and speaking with one voice rather than as individual organizations."
The PACs for CUNA and NAFCU support both Republican and Democratic candidates. Support is not based on party affiliation but instead on a simple metric, according to Gose: "If you support us, then we support you."
CUNA specifically pointed to two state-level candidates from both parties that received support in the 2010 election through partisan communication mailers with local credit unions:
Rep. Larry Kissell (D-NC). Kissell won as a Democrat despite an upside-down district (more registered Republicans in the district than Democrats) in a Republican-dominated election year. CUNA believes Kissell won in part due to the mailers credit unions sent on his behalf.
Rep. Steve Stievers (R-OH). Stievers is a state legislator who upset an incumbent member of the House Financial Services committee, Rep. Mary Jo Kilroy (D-OH). Again, CUNA credits mailers sent to credit union members in his district as tipping the scales towards the election.
Candidates Get Specific Support
Independent expenditures through the CUNA PAC also helped the following House members win their election in 2010, according to CUNA:
* Rep. Kurt Schrader (D-OR). Schrader won as a Democrat in a difficult year for Democrats and in a district that saw several Democratic incumbents lose in lower state office campaigns.
* Rep. Lynn Jenkins (R-KS). Jenkins, who won an open seat, was supported through a strong CUNA media campaign.
Both CUNA and NAFCU encourage credit unions to visit their websites to remain updated on two key issues for credit unions: supplemental capital and increasing the member business loan limits.
"On increasing the loan limits, banks continue to claim that the loan demand is not there. Credit unions are brought in to show that this is not true," explained Gose. "We're beginning to make some inroads on this."
Still, as with most issues winding their way through a Congress that has trouble reaching bipartisan agreement on so many important matters, credit unions are cautioned to expect a long bumpy road ahead.
"Things move slowly through the political system, so you have to be patient," reminded Florida Central's Garcia.
