Is there an equivalent to the Oscar for lobbyists? If so, I nominate those representing the credit union industry for the Best Lobbyists of 1998 Award.

Over the past year they mounted one of the most forceful and effective grassroots campaigns in history to persuade Congress to loosen the criteria for credit union membership.

They won big on Aug. 7 when President Clinton signed the legislation into law.

What is most impressive about the victory of the credit union industry, though, is not what was in the legislation that passed but what was missing.

Opening membership of credit unions to different groups with different common bonds isn't revolutionary. It merely gives legal sanction to what the National Credit Union Administration has been permitting for the past 15 years.

The brilliance of these lobbyists is that they effectively kept all the public rhetoric focused on this nonissue.

A newsletter from a credit union in my community illustrates their approach. Under the banner headline "Credit Unions Under Attack: Bankers Want to Restrict Your Access to Credit Unions," a story described in simple terms how the devious banks were trying to eliminate competition by restricting consumers' access to credit unions.

In bold type the newsletter proclaimed: "We Must Repel Bankers' Attempts to Take Away Your Freedom of Choice."

The credit union urged members to "fight those bankers" by writing their senators and congressmen. The newsletter provided the names and addresses of the local legislators, and included this folksy, encouraging advice about writing such a letter: "It doesn't have to be a long letter, or a fancy one. Just tell who you are, explain why your credit union is important to you, and ask the senator or congressman to make sure consumers like you are not denied access to credit unions."

And in case the thought of writing a letter was daunting, the credit union made available pre-addressed, postage-paid postal cards at all of its branches.

Nowhere in this newsletter, nor in most of the public rhetoric around this legislation, was there any mention made of the more controversial aspects of the proposed legislation: whether credit unions should retain their exemptions from paying taxes and complying with the Community Reinvestment Act.

Credit unions have been expanding in membership and asset size for years. They have also become increasingly involved in making loans to businesses.

The legislation just passed by Congress will accelerate these trends. At some point these changes in the nature of the credit union industry can't help but undermine the original justifications for their exemptions from taxes and from complying with the CRA.

Has that point arrived yet? The credit union lobbyists managed to keep that question effectively off the agenda of public debate on this issue.

The justification for the tax exemption grows weaker as the credit union industry expands. In supporting this measure, President Clinton said, "Credit unions continue to serve an important public purpose-meeting the needs of people of modest means."

Tax subsidies for lower-income Americans do serve important public goals. But credit unions today do not predominantly serve lower-income Americans. Indeed, the average household income of credit union members is $43,480, significantly higher than the $36,740 that the average household nationwide makes.

The Congressional Budget Office has estimated that the tax subsidy for credit unions will cost taxpayers $217 million over the next five years, as customers leave tax-paying banks for credit unions.

Is this subsidy justified to support households with above-average household incomes?

The justification for exempting credit unions from compliance with the CRA also grows weaker as credit unions grow larger. When the CRA was enacted in 1977, credit unions were mostly small, locally based institutions that by definition were thought to serve the needs of their communities. Indeed, this is why the drafters of the CRA exempted credit unions.

Recently, though, the National Community Reinvestment Coalition has begun to question that assumption by examining the record of credit unions in serving the credit needs of all members of their local communities, as required of banks and thrifts by the CRA.

NCRC analysis of 1996 HMDA data showed that credit unions made a lower percentage of home loans to low- and moderate-income borrowers than did banks and thrifts. Indeed, credit unions made only 5.4% of their single- family loans to low-income borrowers, and 16.2% to moderate-income borrowers. The NCRC also found that several large credit unions denied applications for loans from minority applicants at significantly higher rates than from white applicants.

Those clever credit union lobbyists managed to keep these important debates off the editorial pages of the nation's newspapers, and out of the newsletters to their members. The newsletter from my local credit union includes a helpful graphic illustrating the differences between credit unions and banks. Neither tax-exempt status nor CRA exemption is mentioned on this list.

So go ahead, open the envelope and congratulate the lobbyists for the credit unions, the best of the best in 1998.

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