CU trades determine key legislative and regulatory issues from their members

WASHINGTON- With so many issues in Washington potentially affecting credit unions, just how does CUNA and NAFCU determine which issues they should get involved in? They look to their members. Though CUNA and NAFCU are stationed in the Washington, D.C.-area, their real drive comes from all across the country. With eyes on the prize on Capitol Hill and with the regulatory agencies, the two trade associations also keep their fingers on the pulse of the credit unions movement. Both take cues from their membership. “We try to do what we can to make sure our members are getting something out of this trade association,” CUNA General Counsel Eric Richard said. Often, whether issues are regulation or legislation-related, the initial step is taken by CUNA’s members in suggesting a change needs to be made. The decision of what problems to pursue or not follow up on, ultimately, comes down to the membership. NAFCU is set up in the same way. “As a direct membership association, our members have the opportunity to contact us,” NAFCU Director of Legislative and Political Affairs Brad Thaler explained. Often pursuits are initiated by a member or members’ input, he said. The member’s comments are routed to the appropriate committee, a thorough discussion takes place, and a recommendation is sent to the board for further discussion. From there, policy is created. Richard touted CUNA’s committee system as an excellent sounding board for ideas. He added that other times anecdotal evidence grows to a “crescendo of concern.” NAFCU Director of Regulatory Affairs Gwen Baker agreed that the committee system is helpful, particularly when it comes to operational issues. While trade organization staff can read and re-read regulations and legislation, the committees also provide a practical, operational aspect from first-hand experience. She noted the recent proposal from the Internal Revenue Service that could effectively end the usage of option plans for employees of nonprofit organizations, including credit unions. Both groups still have staff searching out issues on the Hill and in the regulatory arena. “Clearly, to some extent Capitol Hill, determines what bills to get involved in,” CUNA Senior Vice President of Government Affairs John McKechnie said. The trade’s involvement depends on a bill’s priority in Congress and how much of an impact it can have on credit unions. One bill that appeared to be on a fast track this Congressional session was the Financial Services Regulatory Relief Act (H.R. 3951), in which both groups stood ready to inject ideas. “We tend not to want to be reactive in those situations, we try to be proactive,” McKechnie said. CUNA had completed its more than a year-long Renaissance Commission study, which gathered information from the entire credit union community and provided a plethora of credit union-backed provisions. NAFCU possessed its own “enhancing the federal charter” initiatives that suited the bill well. Now the bill, which is waiting for a vote by the full House but has yet to be introduced in the Senate, has 11 credit union provisions that CUNA and NAFCU both support. The groups are divided on one item that would permit state chartered credit unions to become members of the Federal Home Loan System. Bankruptcy reform (H.R. 333) is one piece of legislation that has received near universal credit union support, both groups indicated. CUNA and NAFCU staffers agreed that the secondary capital issue has been one of the most controversial ones, partly because a clear, concise definition has not been formulated. Initially, NAFCU did not support its use, but has since jumped the fence. Richard pointed out that all the debate itself on the hot button topic has been “very productive.” On the legislative side, deposit insurance reform (H.R. 3717) is a concept that credit unions definitely do not support or oppose. “The consensus opinion is that the biggest issue for credit unions is parity in treatment with deposit insurance.there are some who could care less as long as there is parity. There are some who would like to see an increase,” Thaler explained. McKechnie said deposit insurance reform was one of the issues in which CUNA was unsure initially how interested members were. Another method CUNA uses to “try to cast as broad a net as possible” in determining its membership’s interest in different areas is its annual CEO/board survey, he said, which aids in prioritizing pursuits. Additionally, CUNA President and CEO Dan Mica remains in direct contact with the organizations 2,000 largest members, CUNA Vice President of Communications and Media Outreach Pat Keefe said. Of course, Richard said, “The ideal is to be involved in all issues affecting credit unions, directly or indirectly.” As NCUA geared up last week to issue its proposal for international banking, NAFCU’s Baker named various troubles that could creep into the discussion, including handling foreign laws when in conflict with U.S. laws and dealing with different employee issues. While military credit unions already have the authority to operate branches overseas, those are only on military installations still under U.S. law, she noted. Banks are already involved in overseas branching and NCUA will be looking closely at their regs, Baker hypothesized. “I think overseas branching will be an interesting one,” she concluded. While some issues are obviously credit union related others are not so blatant. Financial education, included in a broader education package (H.R. 1) and Individual Development Accounts can be counted among the fringe credit union issues, but Thaler said these, and others, are issues “that are in line with what the credit union movement is about.” They may be only indirectly related but in the long run they benefit the credit union community, he said. In addition to issues, credit unions are now dealing with regulations from more agencies than before. Richard and Baker attributed this phenomenon to the evolution of credit unions. “Credit unions are more sophisticated than they used to be.they want to be full service financial service providers,” Richard explained. Baker predicted the trend would continue as credit unions continue to expand their services. A recent example of this is the Securities and Exchange Commission (SEC) proposal to not require credit unions to register as broker-dealers. “The SEC is not an agency credit unions typically deal with,” she said. One thing the credit union groups have no intention of getting involved in is opposing some of the bankers’ efforts to continue to expand their authorities. “Even though some realize it would feel good to hit back, it doesn’t really get us where we want to go,” McKechnie said. He and Thaler both pointed to the verbal warnings issued by lawmakers to the bankers who spoke out against the credit union provisions in the regulatory relief package. “It has always been our position to be constructive in looking to advance federal credit unions and not get into battles to bring other people down,” Thaler said. NAFCU and federal credit unions are better served by focusing its resources on what members want, he concluded. [email protected]