Banking lobbyists could be excused if they look on their credit union brethren in envy when pondering the mess they're in, thanks to the 1991 Federal Deposit Insurance Corporation Improvement Act.

For credit unions were in much of the same bind -- the heightened regulatory scrutiny, greater auditing requirements, and mandated capital standards that were imposed on banks and thrifts by the act, until some crafty work by credit unions' lobbyists.

It was in the early morning hours following one of those sweltering summer nights in Washington when the credit union lobby engineered its greatest coup.

A joint House-Senate conference committee was meeting to discuss what would become of the landmark 1991 banking bill and debate was raging on whether to include several provisions exclusive to credit unions.

Among them were measures that would have allowed the National Credit Union Administration to assess a deposit insurance premium twice a year instead of once, would have prevented the agency from reimbursing insurance deposits until after the fund reached a 1.5% equity ratio, required the regulator to set minimum a capital level for the industry, and reduced allowable limits on loans to a single borrower.

Winning Exemptions

But House conferees, well-lobbied by the leading credit union trade organizations, balked at the provisions and eliminated them from the final bill.

By then the industry lobby, mostly the Credit Union National Association and the National Association of Federal Credit Unions, has already won credit unions an exemption from the more onerous provisions of the improvement act that haunt banks and thrifts.

Those little-loved provisions include mandatory audit requirements for large institutions, imposition of a risk-based capital system, and a concept known as prompt corrective regulatory action, which allows the regulator to move in immediately after an institution's capital falls to a defined level.

Making Its Own Rules

Instead, Congress was persuaded to leave the imposition of mandatory audits for big institutions, a risk-based capital system, and prompt corrective action to the credit union regulator's discretion.

The exclusion of credit unions from the audit provisions enabled the regulator to propose its own mandatory audit standards, then reject them on its own, as it did last month.

The credit union lobby even persuaded Congress to let the regulator draft its own version of the Truth-in-Savings Act provision of the improvement act while standards for banks and thrifts were covered by the Federal Reserve Board's guidelines.

Gaining Strength

The success of the lobby may be attributed mainly to two things. First, credit unions and the National Credit Union Share Insurance Fund, though hit by numerous failures over the past five years, are in better condition than their banking and thrift brethren.

Gun-shy about negative publicity and any similarities to savings and loans, the credit union administration regularly trumpets such positive industry indicators as asset and share growth and record-low loan delinquencies.

Second, the nation's 65 million credit union members have become more active politically. They write letters to Congress, participate in congressional campaigns, and state petition drives.

Capitol Hills has probably never seen a petition drive as overwhelming as Credit Union National's "Operation Grassroots."

Power of the Purse

In 1991, an incredible 6.5 million signatures were gathered on a petition calling for the maintenance of the credit union administration as an independent agency.

This grass-roots power has been buttressed over the past few years by the emergence of the trade groups' political action committees, especially Credit Union National's, as legitimate campaign fund-raisers.

During the last two-year election cycle, Credit Union Legislative Action Council, the trade group's political action committee, distributed more than $700,000 in campaign contributions, making it one of the top 100 such committees in Washington.

The national fund-raising network allows the committee to donate the maximum $10,000 to targeted power brokers on Capitol Hill and to congressional allies who may be threatened by challengers.

Mr. Roberts is editor of NCUA Watch and Credit Union Accountant, which are produced by American Banker Newsletters. For information about the newsletters, call 800-733-4371.

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