The Advocacy Challenge Ahead

The credit union advocacy goal – to revolutionize the operating environment for credit unions through the removal of regulatory burdens and the expansion of powers and opportunities – is intentional. Those words are at the center of CUNA’s strategic plan, and, together with our league partners and member credit unions, we execute a strategy to achieve that goal.

These efforts have produced many victories over the last several years. Together, we’ve removed obstacles to member business lending, expanded field of membership opportunities, reduced regulatory burden associated with new risk-based capital regulation, blocked new arbitration regulation, and tailored mortgage lending, remittances and small dollar loan regulation, among other big victories.

During the pandemic, we have worked to make sure policy promoted credit unions’ ability to be there for their members. Our advocacy led to credit unions lending through the Paycheck Protection Program, Congress conveying new liquidity and troubled debt restructuring protections and the NCUA transitioning to virtual examinations and suspending new rulemaking.

We were able to achieve all of this because we have a strong advocacy goal, a strategy that works, and an agenda that is credit unions’ agenda.

The advocacy challenge ahead is maintaining our progress and taking advantage of opportunities in a fundamentally different political environment.

Unified Democratic control of the federal government, during a period of political divisiveness unmatched in more than 160 years, presents us – and frankly other interest groups – with significant advocacy risk.

What We Are Facing

The economic consequences of the pandemic will have a longer tail than the public health crisis. That is why we continue to press for policy that accommodates pandemic-induced fluctuations in net worth and asset size and keeps credit unions in a position to meet their members’ needs.

As Congress returns to normal legislative activity, we expect close examination of risk-based credit underwriting, the substance and accuracy of credit reporting and the algorithms that produce credit scores. This isn’t a stimulating issue that will generate headlines, but it could have significant impact not only on credit union financials but also on how credit unions are able to improve their members’ financial well-being.

This credit reporting effort is undertaken within a broad discussion on financial inclusion and economic equity. In this discussion, we also expect to hear policymakers push proposals for a postal or public banking option. Frankly, these proposals are misguided because credit unions are well-positioned – though encumbered by archaic field-of-membership restrictions – to help solve the financial inclusion problem. This is an opportunity for credit unions to align our desire to serve more Americans with policymakers’ push for financial inclusion.

At the NCUA, the new chairman will attempt to turn the agency in a different direction. Here, the primary risk is that the agency will respond to the pandemic-caused instability by driving the NCUSIF normal operating level significantly higher than Congress has indicated it should be. Further, the chairman has indicated his desire to redirect the agency’s critical resources, which are provided by credit unions, to redundant examination activities that will not enhance consumer protection.

In short, it appears the chairman would like to use a broad sword where a scalpel is needed.

Nowhere will our challenges be as great as they will be at the CFPB. A new director is expected to undertake the process of undoing the positive work of the last several years. What is about to happen at the CFPB will be the clearest example of why a bipartisan commission at the bureau is significantly preferrable to an omnipotent leader.

Expect the bureau to revisit recently finalized rules. If it was touched by the last administration, it appears to be fair game for the current. Even more concerning, the bureau will likely resume the questionable practice of regulation through enforcement, putting practices traditionally considered compliant in jeopardy outside the legal rulemaking process.

Credit unions exist to improve their members’ financial well-being and advance the communities they serve. To prevent misguided policies from impeding that critical work, all of us – credit unions, leagues and CUNA – must continue to deliver the outstanding 360-degree advocacy that is a hallmark of our movement.

When we work together, we have a positive impact on policy. Telling our story and showing our work will help us confront and overcome these daunting challenges. And after a whirlwind 2020, we have a lot of stories to tell.

Ryan Donovan Chief Advocacy Officer, CUNA Washington, D.C.