The most interesting thing to occur during last week's CUNA Governmental Affairs Conference happened 520 miles away in Dearborn, Mich. There, DFCU Financial Credit Union filed suit against the Michigan league claiming it was interfering with its attempted conversion to a mutual savings bank (see related story, page 1).
During that same GAC, political pundit George Will made reference to what he called a national "cognitive dissonance," which is how guys who have an M.A. from the University of Oxford and a Ph.D from Princeton refer to what the rest of us would call disagreeing with ourselves. Will was referencing an American public that preaches small government but embraces enormous government. At GAC there was a similar cognitive dissonance: speaker after speaker to the group's meeting, including Treasury Secretary John Snow, pledged the Bush Administration's firm support for the credit union tax exemption. Yet before the legions were sent to Hike the Hill, all were sent packing with warnings that the tax exemption is under fire and they need to do all they can to help protect it.
Yet that disconnect between the threat and the reaction is an annual event at the largest annual meeting. That's why the news out of Dearborn was much more compelling, since it is charter conversions (which only serve to reinforce a perception among misinformed media and legislators that there is little difference between CUs and banks other than a charter) that have the potential to have much more of an effect upon credit unions than is widely recognized.
What will be fascinating to see as part of this lawsuit is how far the discovery process will go. Yes, the credit union (actually just about 12 people at the credit union) has filed a lawsuit against the league, but as part of its defense the league will have the right to demand a fair number of documents from the credit union and its advisors. Yes, the judge will put limits on what the credit union will have to produce, but surely the league has a right to see correspondence between board members, management and the consultants brought in to help sneak the conversion past the members. Complicating matters is that the credit union is using an attorney to help guide the conversion process, so it might look to hide behind attorney-client privilege. One attorney with whom I spoke who will be taking a higher profile (on the pro-credit union side) in the coming weeks said the suit has raised numerous such questions. So stay tuned.
By the way, the credit union issued a statement saying the conversion is between "DFCU and its members." First, those are supposed to be the same thing. And second, if the members matter so, then the credit union will table the conversion as members at its annual meeting voted to do.
Meanwhile, in other notes from GAC...
A politician who didn't speak to the meeting and who isn't involved in any credit union-related legislation was nonetheless the subject of much hallway discussion: Hillary Clinton. That's a byproduct of the Clintons' (both of them) lightning-rod status in the country, and many were discussing whether Hillary will run for president in '08. If you want to talk to someone who has an interesting take on her chances, grab Colorado CU League President John Dill for a moment. Dill is a long-time Capitol Hill staffer and lobbyist who brings an intriguing perspective.... As The Credit Union Journal was the first to report, CUNA's GAC has outgrown the Washington Hilton and plans to move to the Washington Convention Center and surrounding hotels in 2008. After three decades as the home to GAC, the Hilton has seen numerous historic moments, none matching the dead silence of thousands of people in response to news that the Supreme Court had ruled against credit unions, the roar that followed then-Speaker Newt Gingrich's announcement that he would depart from tradition and add his name as a co-sponsor to HR 1151, and the fervor that followed to get that bill passed. For me, I'll always see the Hilton as the crossroads between America's not-for-profit financial community and its maximize-the-profits lower-level deli...Some of the best presentations before GAC this year all came from journalists: Bob Woodward, Ted Koppel and George Will. Each took turns being funny, dead serious, and insightful. Woodward spoke to the path to the Iraq war, Koppel addressed the state of journalism, and Will the status of conservatism and the country. Among Will's many points: "Pessimism has its pleasures, because you are right 90% of the time," and "Republicans arrive in Washington as conservatives, and then go native." ...Ever wonder if that fire alarm in your hotel room is in working order? During GAC, many guests staying at the Marriott Wardman Park were able to confirm at 1:15 a.m. that the shrill, piercing alarm is fine and functioning, and that it can even go on for more than an hour interrupted only by a voice ordering people to evacuate. Many did into the cold night. But some didn't, such as a newspaper editor who could see from his window that the firemen who had responded were just standing around and, having been through other similar alarms, concluded there was little threat. Which means this column will someday end when its author is awakened by yet another fire alarm, concludes its yet another false alarm, and rolls over as the building burns.
Frank J. Diekmann is Editor of The Credit Union Journal.
