When the 111th Congress adjourned late last year, it marked the end of perhaps the most significant legislative period for credit unions since 1998.
Credit unions secured several victories and one significant defeat during consideration of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Congress enacted two laws aimed at helping credit unions deal with the corporate credit union situation, and we moved member business lending legislation to the Senate floor in the last days of the Congress, taking the bill as far as we ever have.
As we look forward to the next two years, the credit union agenda on Capitol Hill remains crowded and complicated. It revolves around these four issues:
1. Protecting the tax status. This is always the most important issue facing credit unions on Capitol Hill. If we lose that, it’s “game over” for credit unions.
2. Fixing the debit interchange fee regulation and preventing further erosion to interchange fee revenue. This represents the most imminent threat to credit unions.
3. Supplemental capital. This is key to credit unions’ future growth.
4. Member business lending. We’ve invested and earned so much political capital on this issue, and we’ve taken legislation almost to the goal line.
These four issues are our issues, but they do not operate in a vacuum on Capitol Hill. Congress has a full slate of issues on its agenda, as well.
We expect Congress to begin reforming the government sponsored enterprises, which could have significant implications on credit unions’ ability to make mortgages. We also expect Congress to exercise its oversight responsibility as the administration implements the Dodd-Frank Act.
Congress is also expected to begin addressing the federal budget deficit and reducing the federal debt. As part of this process, some have suggested significant tax reform, including the elimination of all tax expenditures—even the credit union tax exemption.
Demonstrating the value credit unions bring to members and nonmembers is our most powerful weapon in the battle to protect credit unions’ tax status.
The credit union tax status “costs” the federal government approximately $600 million each year. Credit unions provide, however, approximately $6.5 billion annually in benefits to their members through lower rates on loans, higher rates on savings, and lower fees.
When you add the benefit that bank customers receive from having credit unions in the marketplace, the total benefit to consumers approaches $10 billion. That makes the credit union tax status one of the federal government’s best investments.
These numbers tell part of the story, but the true impact of credit unions on their members’ lives is measured by more than numbers.
It’s told in the success stories of members who have been helped by credit unions when banks have turned them away. It’s told by credit union employees and volunteers who provide the high levels of member service for which credit unions are universally known.
The data, the stories, the reputation, and—most importantly—the people are what differentiates our advocacy efforts from our opponents’ efforts.
Credit unions have emerged from some very challenging years, both in the marketplace and on the Hill. This upcoming year in Congress will be as challenging as any, which makes your participation in Hike the Hill, Operation Comment, and other CUNA initiatives even more important.
No one will speak up for credit unions but us, and there are plenty of voices speaking against us. Whether we’re discussing the tax status, interchange fees, supplemental capital, or member business lending, we must speak with one voice.
If we do, we’ll meet and overcome the challenges facing us on Capitol Hill.
JOHN MAGILL is CUNA’s senior vice president of legislative affairs. Contact him at 202-508-6715.