WASHINGTON — If credit unions and banks want to see regulatory reform, the first step may be to better tolerate the other side of the financial aisle.
That's according to U.S. Rep. Denny Heck (D-Wa.), a freshman Congressman and former credit union employee running for re-election this November.
Despite the legislative challenges CUs face in the next Congress such as raising the MBL cap, protecting the tax exemption and supplemental capital — a subject on which the representative co-sponsored a bill — Heck told Credit Union Journal recently, "I think regulatory relief is the one for which there's the most feasible path forward because of the feasible alliance between banks and credit unions. That's a fairly irresistible force if they — and most especially banks — could set aside their differences."
Heck went on to add that "the war the banks have declared on credit unions keeps everybody from getting to a consensus approach to regulatory relief.
He added that "Banks and credit unions frankly ought to both be trying harder to make friends with one another to make common cause, but that divide has kept us from getting there. I think if you put especially the community banks and credit unions on the same side of the wagon pushing in the same direction, we'd be making a lot more progress."
The legislator pointed out that most of the conflict between the two sides originates on the banking side rather than the credit union side. "I don't have a lot of credit unions that come to my office that spend all their time beating up on the banks," he noted.
In addition to both sides learning to work together, lawmakers could help smooth the process, said Heck.
"The one person who could most likely cause us to have progress is the guy who wields the gavel," he offered. "I have chaired committees in the state legislature; I know what it's like. I know what I'd do. I would have them both into my office and tell them: 'We're going to move a bill, you guys need to be together and hold your guns for other issues.... Now go in the other room and don't leave it until you figure out how you're going to do this, because I've got the gavel and I'm going to move something one way or the other — don't you want to be on the same page when that happens?' "
But, he added, "that's not what happens in committee" these days. "There seems to be more interest in scoring ideological points than in the hard, gritty work of actually legislating."
Heck confessed that he can't remember how he was introduced to credit unions, but said that he has been a member for "as long as I can remember."
In the late 1970s he worked as director of marketing for Columbia Community CU in Vancouver, Wash., which he said was originally a railroad-based CU but was "one of the early migrants to community-based."
As director of marketing, a lot of Heck's job involved meeting with employers and employees and selling the benefits of membership. "It was the easiest sale in my life," he said.
In the early 1980s Heck moved to Olympia, Wash., and since that time has been a member of Washington State Employees CU.
Heck predicted that "any meaningful regulatory relief" will not likely be achieved during this Congress due to conflicts in committee and difficulties in getting bills moved past the House and on to the Senate.
CU Tax Exemption Remains Safe
Regardless of what happens in the next Congress, he predicted that the CU tax exemption is safe for some time to come.
"I'll say the same thing I've said to the banks. There are two chances [the tax exemption will be repealed]: slim and none — and slim just left the room," said Heck.
"I don't see that as an existential threat in the immediate future. It may very well be in the long-term future, but the fact of the matter is credit unions have too many friends and too many members.... I don't think it's going to happen."
So when it comes to other issues, how can CUs better communicate their agenda to Congress?
"If I were paid to advise credit unions on how they might be able to more effectively advance the cause, what I would advise them to do is spend a lot of time in the Senate, where bipartisan agreements still seem to be possible to get something passed, especially with respect to regulatory relief," said Heck. "I won't say the House is a hopeless cause, but the behavior of the last 20 months is not very encouraging in that regard."
