Credit Union Leagues Fatten Up War Chests In Preparation of Banker Battles

DES MOINES, Iowa – State leagues from Iowa to Virginia are building up campaign war chests this fall in preparation for perhaps some bruising legislative battles in January with the banking lobby over an assortment of issues ranging from taxes to business lending and field of membership. The Iowa Credit Union League became the latest to disclose the scope of its “defense” or “advocacy” fund to deal with an anticipated barrage of banker-inspired challenges in the state legislature, in the courts or before other government bodies. “It may not be well known but we have a state bankers association that is just about as aggressive as Utah,” said Pat Jury, vice president of the Iowa League, which is currently signing up its largest CUs for sizable monetary pledges to go toward its defense fund. During CUNA’s annual Future Forum conference in Reno, the Virginia Credit Union League disclosed it started a “defense fund” in August in preparation for possible banker attacks on taxes following deliberations of a state commission seeking an overhaul of the tax code in light of a budget crisis facing the Commonwealth. “We just want to be pro-active – ready in case,” explained Rick Pillow, president and CEO of the League. For the time being, the Tax Commission, he noted, has put off consideration of the funding issue until after the November elections. But Navy Federal, headquartered in Vienna, Va., quickly sought to make its commitment to the Virginia League Fund known by issuing a statement Oct. 2 detailing its contribution of $20,000. Navy Federal said it is “participating, contributing” to the fund “not because we see taxation as an imminent threat” in Virginia, but because the nation’s largest CU views the banker attacks as undermining the structure and purpose of CUs everywhere. In Iowa, Jury said the League’s leadership decided it had to become “pro active” in the fight against bankers “to protect the industry,” and thus it was raising funds-apart from dues-to defray the cost of financing ad media buys, public relations, polling and for additional lobbying support. Robert Hoefer, president of the $325 million Dupaco Community Credit Union in Dubuque and a member of the League’s Legislative Committee, said large CUs in the state like his “are willing absolutely to commit” extra funds to the cause. “Anytime we can help this kind of cooperative spirit, we will,” said Hoefer, adding Iowa CUs must stick together against the “divide and conquer” approach of the banking industry which often seeks to pit large against small CUs as banks have tried to do as in Utah. For its part, the Utah League of Credit Unions said it has had an “advocacy” and legislative fund for years and raised funds toward it during the November 2002 elections and last spring when the state legislature adopted a tough law blocking business loans for state chartered CUs and narrowly turned back a first-time 5% franchise tax on three large CUs. Susan Newton, executive director of the American Association of Credit Union Leagues in Washington, said the banker attacks across the U.S., particularly in five states including Utah, look to be well coordinated “and have been rumbling” for months with a focus on FOM, taxes and business lending. The state Leagues, she said, all along have been working with CUNA and AACUL in coordinating a combative strategy, and the Virginia “defense” fund has been used by states as a “good model.” Nearly every state has been revamping its defense or advocacy programs as well in anticipation of banker challenges. Each state faces different threats and must approach them in their own manner, she said. The Virginia League said donations coming in to its fund have ranged from $100 from the very smallest CU to contributions in the thousands of dollars. More than a fourth of the funds have been raised toward the League’s goal which it hopes to reach by the end of November. The Iowa League said it hopes to have its fund ready in January. In its statement, Navy Federal said it made its $20,000 contribution “based on a formula developed” by the League and it listed reasons CUs should not be taxed including their non-profit and coop structure, their volunteer board, “defined fields of membership” and one vote per member “democratic control.” The statement also stressed that CUs “serve a greater public good for consumers of modest means” and therefore should not be taxed. -