Five years ago, credit unions generally assumed a reactive posture toward public policy: we were consumed with business as usual, and engaged our regulators and elected officials only when proposed new laws and rules prevented us from serving our members well. The challenge of addressing and overcoming these obstacles was left to the state and national credit union trade associations. A series of circumstances has forever changed any passive approach. Fallout from the AT&T Family Federal Credit Union lawsuit and the collapse of barriers between the banking, insurance and securities industries have awakened us to the realization that progressive action is needed. The financial services industry has become an ocean of quickly shifting tides, in which controlling our destiny means taking the initiative on legislation and maintaining an ongoing engagement with our elected representatives. Our state and national trade organizations have done an excellent job in recent years at doing just that. In California, our legislators see credit unions as a potent, determined political presence. Our national trade association, CUNA, is known by name in the halls of Congress and has been recognized as among the top advocacy groups in the country. These are accomplishments to be proud of. But they are only one part of a comprehensive advocacy system we must employ for us to maintain – let alone enhance – our operating environment and future powers. Credit union advocacy efforts must become more local and decentralized. Our top talent must establish working partnerships with legislators who understand the credit union difference. Whenever legislators hold a town meeting, an open house, or a fund-raiser, they need to see credit union faces they recognize and appreciate for their support. This is the direction in which California is determined to move even more aggressively. Let me detail some of the benefits a connected credit union presence has obtained for California credit unions: * Several years of dedicated relationship-building with our legislators resulted in our achieving one of our highest legislative goals, the repeal of the state's franchise tax on state-chartered credit unions. California was one of only a few states that still imposed an income tax on credit unions. Correcting this lack of parity with federal credit unions enhanced the state's dual-charter system. * Credit union leaders were instrumental in defeating a seriously flawed financial privacy bill in the California Legislature. The legislation was much more strict than federal law, and probably would have been the most stringent in the nation. We guard our members' privacy, but the proposed bill, which received nationwide attention, was so poorly crafted that it would have imposed a morass of unintended, conflicting and unworkable requirements on all credit unions with members in California. * Forms of capital beyond accumulation of earnings may now be considered as equity capital, as the commissioner of our state Department of Financial Institutions approves. This will become increasingly important to California's credit unions now that federally insured credit unions are subject to new capital requirements. As part of this process, a League task force this year identified five potential sources of alternative capital. We work closely with the commissioner of the DFI, and hope he will adopt our suggestions. This has led to discussions with NCUA regarding all federally insured credit unions applying these forms of capital toward net worth and other capital needs. Efforts by local credit union leaders will be critical in making this a reality. * Working with the Department of Financial Institutions and the Legislature, credit union leaders ensured passage of twin pieces of legislation that will pave the way for greater interstate and even international credit union branching in and from California. We hope this will serve as a model, so credit unions can enjoy the cross-border financial service provisions of the North American Free Trade Agreement. * Credit unions helped pass legislation that will allow state and local government agencies to deposit funds in credit unions. This removes a competitive disadvantage California credit unions faced. It is also consistent with state policy for government agencies to invest in local financial institutions, and with our philosophy that the credit unions that serve government workers should be able to take deposits from their sponsoring agencies. * California credit unions can now sell the same insurance products that the Gramm-Leach-Bliley Act allows banks to underwrite and sell, including property, casualty and life insurance. This will allow California's credit unions to better compete with the new powers banks have. These achievements resulted from the contacts that League staff and local credit union leaders developed with elected officials. And there is more that we can and will do. To bring credit unions into the leadership process earlier, committees of local credit union leaders will meet with potential office holders to make recommendations as to which candidates should receive credit union system support. We are also pursuing opportunities to elect credit union leaders to public office; to this end, we sponsored, in conjunction with CUNA, a "Campaign College" to familiarize politically minded credit union leaders on the techniques of being a candidate and working for one. We are also encouraging credit unions to form locally controlled, regional political action committees so they can make contributions to the candidates of their choice. As of this writing, local PACs are up and running in the Bay Area and Sacramento; others are in the works. For credit unions to continue forging their own future, rather than having it dictated by others, localizing our advocacy efforts is essential. Our elected officials are and will always be more sensitive to their constituents than to statewide associations. A strategy of bringing local credit union leaders in constant contact with incumbents and candidates, of placing greater power in local hands, allows our movement's leaders to fully leverage their broad community support and grassroots know-how. In future years, I hope to be able to report even greater success in promoting policies that benefit all credit unions and the members we serve.