Midwest goes against the tide with wins by Democratic governors

WEST PALM BEACH, Fla. – While most of the country saw Democratic supporters with long faces and Republican backers with smiles the morning after Election Day, credit union executives in the Midwest were generally smiling about Democratic wins in their region. Michigan, Wisconsin, Illinois and Kansas all elected new Democratic governors who have expressed support for credit unions. Of course, even where Republicans were winning, credit union leaders were pleased with the results. In Ohio, for example, Republican Bob Taft was handily re-elected and Republicans strengthened their hold on both houses. “The election did not hurt us in any way,” said John Florian, chief lobbyist for the Ohio Credit Union League. Minnesota will also seat Republican governors in January. Governors in Missouri – Democrat Bob Holden – and Indiana – Democrat Frank O’Bannon – were not up for election. The governors’ races are particularly important because, even though credit union regulators are not cabinet-level jobs, they often transition when the party in power changes. As Florian put it, the results “are very good news for Ohio credit unions, the appointed people in the Commerce Department are very supportive of financial institutions.” Midwest credit union league execs also were generally pleased with results in legislative races, though heavy turnover – the result of election defeats and term limits – is likely to slow legislative and regulatory offensives in the early months of 2003. In Illinois, Democrats will control Illinois state government for the first time since 1977 as state Rep. Rod Blagojevich becomes the first Democrat elected governor in 30 years. The party took control of the Senate and retained its majority in the House. As a representative, Blagojevich scored 100% on candidate scorecards produced by the Illinois Credit Union League in past elections, said Keith Sias, director of state governmental affairs for the Illinois Credit Union League. “We were very pleased,” Sias said. The credit union’s PAC gave Blagojevich at least $2,000, according to the committee’s campaign financial disclosure filings, and Sias said the PAC gave a smaller amount to his Republican opponent, Attorney General Jim Ryan. The PAC spent $80,750 on 92 candidates with 85% of the contributions going to winning candidates, according to a preliminary analysis by Illinois CUPAC. The league has no plans for significant early legislation, in part because of the transition in the Senate and governor’s office but also because a modernization bill last year eliminated any pressing concerns. Sias said that after a settling-in period, the league would likely seek “cleanup” legislation to last year’s efforts. Gov.-elect Jim Doyle is the first Wisconsin Democrat to hold the state’s top job in 16 years. At the same time, the state Senate shifted from Democratic to Republican, while the Assembly remains in Republican hands. “We’ve had a little bit of political turmoil,” observed Georgia Maxwell, director of government affairs, while noting the new legislature “will have a lot of new faces.” At the top of Maxwell’s to-do list for the political transition is to lobby the new governor to retain Ginger Larson as director of the Office of Credit Unions in the Department of Financial Institutions. Though the director, while not a cabinet-level job, serves at the pleasure of the governor, Maxwell realizes that the job is vulnerable to a change in political power at the top. But, she said, “we’re going to be extending support to Ginger, adding “we have many friends currently in the legislature.” In Michigan, the Michigan Credit Union League Action Fund endorsed in 138 state and Congressional races and picked 132 winners, said Patrick La Pine, the league’s director of government affairs. After supporting Democratic Cong. David Bonior for governor in the primary, the league switched its support to the eventual winner, Democrat Jennifer Granholm. Granholm, however, will face a Republican-dominated legislature. “As the sole financial institution trade organization supporting Governor-elect Granholm, our endorsement of her candidacy places credit unions in a unique position,” league president and CEO David Adams told members in the league’s weekly newsletter. “We expect to have an opportunity to influence the selection of the next OFIS Commissioner, or its successor agency.” Adams also noted that the director of Granholm’s transition team “has a long history of CU friendship.” Justin Hupfer, vice president of government affairs for the Iowa Credit Union League, boasted of similar success. The league’s PAC backed returning governor Democrat Tom Vilsack and winning candidates in 54 of 59 contested races for state representatives, and 22 of 24 state Senate candidates. Hupfer took particular pride in noting that two bankers running for election, without support from the credit union PAC, were defeated while a former credit union board member, Jim Seymour, will be in the new Senate. The league’s strong batting average is particularly important to Iowa credit unions, Hupfer said, because the state superintendent of credit unions is developing legislation that would rewrite the state credit union code. Hupfer said the league is pushing for language that will give state-chartered credit unions parity with federal credit unions on several investment issues, including the issuance of secondary capital. The league also hopes the bill will include language that will allow credit union boards to meet electronically and give the superintendent of credit unions powers comparable to the superintendent of banks. Term limits mean that credit unions in Missouri will have a lot of educating to do in the General Assembly. The 163-member House will have 90 new members and the 34-member Senate will see 12 new faces, said Amy McLard, vice president for public and legislative affairs for the Missouri Credit Union System. For the first time in 48 years, Republicans will control the Missouri House. The party also will retain control of the Senate. In addition, the league noted that while one credit union volunteer in St. Louis won a seat in the House, several long-time credit union friends, Democrats, lost seats. “It’s really going to be a big education push for us,” McLard said. “There are a lot of people who may not have a lot of knowledge and understanding of credit unions and it’s going to be our job to make sure that they understand what we are and what we do.” To get a head start on the meeting and greeting of new members, MCUS has scheduled a breakfast for the freshman in mid-December in Jefferson City. In Minnesota, the Minnesota Credit Union Network did not endorse any candidates. “The political environment was unsettled,” said Kevin Chandler, president and CEO. The Democrats retained control of the state Senate and the house widened its majority in the House. The victory of GOP Gov.-elect Tim Pawlenty gives Republicans more control over state government than at any time in the past 30 years. He replaces independent Jesse Ventura, who did not seek re-election. A former state, legislator, Chandler said the group’s PAC spent $15,000 during this election cycle, consistent with past years. It also held fundraisers for Pawlenty and others, including one at its annual fall conference for state Senator Don Samuelson, who authored the 2002 Minnesota Credit Union Protection Act. Samuelson, running on the Democratic-Farmer-Labor ticket, lost his seat by less than 200 votes. While expenditures were modest, in Minnesota fashion, Chandler said credit unions got more involved as campaign volunteers. “As a former state senator, there was nothing I valued more than volunteers, especially nowadays” Chandler said. “It was so hard to find anyone to volunteer that I wanted to kiss every one of them.” Credit unions will now wait to see who Pawlenty selects as commissioner of the department of commerce. Though the legislature rewrote the state’s credit union act last year, Chandler said, “There are a few things we didn’t get last time. whether a commissioner wants to be helpful or harmful is very important.” Kansas has a new Democratic governor, the first in eight years, but both houses of the legislature remain in Republican hands. As in many states, however, the big issue facing the Kansas legislature will be balancing the budget in tough times. While the Kansas Credit Union Association was generally pleased with the outcome of the vote in the state, they worry that the legislature will try to solve that state’s budget crisis with a tax on credit unions. The state’s financial problems, said Bill Henry, the association’s director of government and regulatory affairs, “puts us in the middle of the bull’s eye for a privilege tax.” Henry described the tax as similar to a franchise tax, paid as a percentage of a credit union’s profits. Henry said for-profit financial institutions already pay a state franchise tax. He said that strong bank clout in the legislature could bring such a tax to a vote next year. In Indiana, the legislature remains split, with Republicans retaining control of the Senate and Democrats holding a slim, 51-49 lead in the House, though Republicans were pushing for a recount in one district at press time. Kay Neidlinger, spokesperson for the Indiana Credit Union League, said the league should receive a friendly welcome in the legislature regardless of which way power tilts in the session ahead since the league’s PAC supported winners on both sides of the aisle. -