While serious threats to the credit union tax status never fully materialized, other policies that would have affected credit union operations were introduced in Congress in 2017—and each was defeated through CUNA’s advocacy efforts.
Early budget drafts from President Donald Trump’s administration featured cuts to a number of programs, including a major fund credit unions use to serve their communities.
The Treasury’s Community Development Financial Institution (CDFI) Fund awards grants and other funds to certified CDFIs around the country.
After being funded at $233.5 million in the previous fiscal year, it was zeroed out in early budget bills.
CUNA quickly launched a nationwide grassroots support effort to ensure funding. Outreach included working with CDFI-designated credit unions through CUNA’s Member Activation Program to show how they leveraged the CDFI funds many times over within their communities.
Examples sent to congressional appropriators included a Tennessee credit union that turned a $2.1 million grant into $10,500 down payment assistance loans for more than 200 families, and a Missouri credit union that used $849,000 in grant money to make $22.7 million in auto loans.
Through these efforts, Congress passed a funding bill that not only restored the CDFI Fund, but increased funding levels to $248 million.
While credit unions earned a win on CDFI funding, an unexpected threat emerged during the appropriations process: a financial services and general government appropriations bill that would have placed NCUA under the appropriations process.
“NCUA is unique among federal regulators in that the institutions it regulates fund the agency, meaning a regulator that operates independent of the annual appropriations process is vital for credit unions,” says Donovan. “As the one sending the resources, credit unions deserve a say in how they are being used.”
Credit union advocates worked closely with Reps. Mark Amodei, R-Nev., and Pete Aguilar, D-Calif., who introduced an amendment to remove the provision from the appropriations bill.
The day after Amodei and Aguilar introduced the bill, credit union advocates across the country assembled on a conference call with the expectation that support for the amendment needed to come together within 12 hours.
Over those 12 hours, CUNA, leagues, credit unions, and members used every resource and communication tool available to send Congress more than 3,000 messages stating that placing NCUA under appropriations was unacceptable.
“While the vote ended up happening nearly a week later, lawmakers heard our voices loud and clear, and the Amodei-Aguilar amendment passed by a voice vote,” Donovan says. “It was a true testament to the full advocacy strength of the credit union movement to see a threat, mobilize, and execute a successful strategy to remove it over the course of a few days.”
CUNA’s legislative advocacy helped secure another regulatory relief win, working with Congress to overturn the Consumer Financial Protection Bureau’s (CFPB) arbitration rule via the Congressional Review Act.
The bureau finalized its rule in July 2017, effectively banning the use of predispute arbitration clauses.
While credit unions generally do not use such clauses, CUNA felt the rule deprived consumers of an effective legal alternative to class-action litigation.
“The arbitration rule was inappropriate for credit unions, as member-owned financial institutions, because without arbitration clauses credit union members in a dispute would be forced to litigate against their credit union,” says Leah Dempsey, CUNA’s senior director of advocacy and counsel. “The CFPB had an opportunity to exempt credit unions from the rule, as it does with all its rules. When it did not, we were forced to use other methods to prevent it from becoming effective.”
To overturn a finalized rule through the Congressional Review Act, both the House and Senate must approve resolutions of disapproval, which the president must then sign.
The House passed its resolution relatively quickly, at the end of July. The Senate vote came down to the wire, with Vice President Mike Pence breaking a 50-50 tie in October to approve the measure, which President Trump signed shortly after.
“In a situation where every vote was essential, CUNA’s outreach to members of the Senate about why this rule would hurt consumers—despite what the CFPB and others claimed—made a huge difference,” says Eli Joseph, CUNA’s deputy chief advocacy officer.
NEXT; Regulatory advocacy