Prepare for the End of Gridlock

The paralysis that has gripped Washington will end eventually. CUs must be ready when it does.

March 7, 2014

What’s the definition of insanity? Doing the same thing over and over again but expecting different results. Speaking of Congress… 

It doesn’t matter if it’s the Republican-controlled House of Representatives passing legislation to repeal Obamacare more than 40 times in three years or if it’s the Democrat-controlled Senate using procedural tactics to prevent amendments from being offered on legislation. Many activities take place on Capitol Hill repeatedly that lead not to different results but to legislative gridlock.

For those responsible for advancing a legislative agenda, the gridlock is frustrating. For those who look at what is happening from outside the Beltway, it must surely look like insanity.

Gridlock in Washington has contributed to a government shutdown and fiscal cliffs, slowed recovery from the Great Recession, and given Congress the lowest approval rating in history. In fact, for a time in 2013, former National Security Agency contractor Edward Snowden, who continues to disclose classified documents to the media, had a higher public approval rating than Congress.

But this level of disapproval is unsustainable, which is why some observers expect Congress will soon find ways to break the gridlock and return to “normal.” The approval of a two-year budget deal and an omnibus appropriations bill are steps in the right direction.

The key for advocacy groups like credit unions is to be prepared for the inevitable breakthrough. The first step in being prepared is understanding the dynamics of the challenge. And in terms of advocacy, it’s important to remember that this is a marathon, not a sprint.

That which Congress does quickly it rarely does well. This is one reason Congress rarely does anything quickly, even in normal times. Major reform, such as what Congress is considering with the tax code, should take a long time to develop because the consequences of getting it wrong are severe.

That doesn’t mean, however, that those advocating for or potentially affected by reforms should wait until Congress is ready to act before they engage. Waiting to engage with Congress until it’s ready to vote on a matter is an almost certain way to come out on the losing end.

This is why credit unions must stay engaged in the process the entire time—an advocacy marathon, so to speak.

As we look at the threats or opportunities credit unions might face on Capitol Hill, we have very low expectations in terms of bills actually becoming law. But make no mistake: The work Congress does on matters such as tax reform and housing finance reform this year will significantly influence the outcome of these issues in the next Congress.

Some credit unions are already running in the advocacy marathon. But we need everyone to join the race by contacting legislators, educating members about the cooperative difference, involving members in advocacy efforts—in short, uniting for the good of both credit unions and members.


“Being a cooperative means we’re supposed to help our members wherever we can, not just from the financial services perspective,” says Dave Wilde, vice president of marketing for Sun Federal Credit Union, Maumee, Ohio. “We want to communicate to members that they’re truly part of something bigger—that this cooperative is more than just a financial institution.”

No need to wait

The most important time to act on retaining the credit union tax status is now—before the formal mechanisms in Congress start turning.

Both the Senate Finance Committee and the House Ways and Means Committee have gone out of their way to solicit input from the public and from members of Congress as they piece together reform legislation. As drafts are released, they will continue to solicit feedback—positive and negative—to help guide the bills that will ultimately become law.

As the committees and ultimately the two chambers consider the bills, however, making changes becomes more and more difficult.

Some in the credit union system say they will wait to engage until there is a vote on tax reform or on the credit union tax status. But this would be a lot like showing up for the last mile of the marathon. It would be a guaranteed loss because at that stage in the process it would be next to impossible to get out of or defeat the bill.

That’s why engaging in CUNA’s “Don’t Tax My Credit Union” campaign now is so important. In 2013, more than 1.3 million communications were sent to Congress urging legislators to retain the credit union tax status.

This is a good start, and it has helped protect the tax status in the early stages of reform talks. But we know this is just the tip of the iceberg in terms of our potential.

If everyone engages in this effort, the conversations credit unions have with congressional members in 2014—and the communications credit union members send to Congress—will propel us to victory when the gridlock subsides, Congress passes tax reform, and the president—whether it’s President Obama, President Christie, or President Clinton—signs it into law.

The battle to protect the credit union tax status isn’t just limited to Washington, however. Increasingly, it can also be seen in state capitals and even local communities. In 2013 alone, bankers and their lobbyists launched attacks on credit unions in Illinois, Oregon, and South Dakota.

Leagues and credit unions in those states—through smart membership engagement and advocacy tactics— have been successful so far in defeating these bank attacks. But similar state-level attacks are bound to continue in the months and years to come.

Again, the best antidote to these threats is credit unions’ willingness to engage their members.


Play to our strengths

Play to our strengths

If 1.3 million contacts delivered to Congress represents the tip of the iceberg in terms of our potential, how much of that iceberg is still submerged?

In 2013, roughly two-thirds of the 1.3 million communications were delivered by members of roughly 300 credit unions, those who directly contacted their members via email or social media and urged them to take action via

These credit unions represent just 5% of all credit unions nationwide and yet produced two-thirds of all messages Congress received on preserving the credit union tax status. Imagine our potential if 600 credit unions—or 900 or 1,000 or more—had engaged their members similarly!

Why should credit unions engage members directly? Consider the results of a groundbreaking research project CUNA conducted recently with two credit unions: CommunityAmerica Credit Union in Lenexa, Kan., and University Federal Credit Union in Austin, Texas.

Researchers sent email communications to 70,000 members of these credit unions about the Don’t Tax My Credit Union campaign and then surveyed 4,100 of those members about their attitudes toward advocacy and the credit unions in general.

The results of this research should encourage any credit union leader to engage members with advocacy communications: Open rates on the emails were as high as 40%, with “click rates” as high as 6% and “action rates” (those who took action by sending their lawmaker an email) as high as 5%.

Less than 0.1% of respondents opted out of these email communications, and neither credit union received any complaints. Taken together, these results could be seen as positive, if not exceptional. But they pale in comparison to the changing attitudes of the members who were contacted.

Eighty-six percent of members who were contacted agree with the statement, “In the future, I am likely to do a greater share of my personal banking with a credit union.”

In other words, the very process of educating members on the ownership structure of their credit union—and especially the value it delivers via more affordable loans, higher interest on deposits, and lower and fewer fees—increases those members’ loyalty to the institution and willingness to engage it for more financial products and services.

Similarly, the study found that 78% of members agree with the statement, “It is okay for my credit union to contact me with information about proposed laws… that impact how credit unions operate and ask me to consider taking action to contact elected officials.”

Not only do educated members want to use their credit unions more, they’re also more willing to act to protect them from legislative and regulatory threats and to advocate in support of a less-restrictive operating environment.

This is a win-win situation for credit unions: Engage members to participate in advocacy and you will not only generate a sizeable grassroots response likely to influence lawmakers, you’ll also increase member loyalty and wallet share for your credit union.

Members’ willingness to advocate on behalf of credit unions extends to the political arena as well. Other CUNA research finds that by a 2-to-1 margin, members are willing to positively consider information shared by their credit union on whether a candidate for office supports credit unions and their issues.

Again, we’ve barely tapped our potential to be a powerful grassroots force in support of candidates who understand and support credit unions.

In short, engaging members on advocacy-related issues is a “win-win” for credit unions. We get a high rate of participation among members, which translates into large numbers of contacts (for legislative issues) or potential votes (for political campaigns), all while strengthening the bond of loyalty between member and credit union in the process.

That’s why member engagement on advocacy is such a critical component of CUNA and the leagues’ “Plan to Win” advocacy strategy. If credit unions are going to “win” in Washington and state capitals, then we have to start by playing to our strengths: engaging our 98 million credit union members.

RYAN DONOVAN is CUNA’s senior vice president of legislative affairs. Contact him at 202-508-6750. Follow him on Twitter via @RyanDonovan.

TREY HAWKINS is CUNA’s vice president of political affairs. Contact him at 202-508-6712. Follow him on Twitter via @TreyHawkinsDC.