Given the wide-ranging events of 2021—the Jan. 6 attack on the U.S. Capitol, the inauguration of a new president, a new party assuming control of both chambers of Congress—Ryan Donovan knew it would be “a new world” for advocacy and credit unions.
“The good news is we were well positioned to succeed in 2021—and we did,” says Donovan, CUNA’s chief advocacy officer. “There’s a lot to be proud of up and down our advocacy agenda.”
Focus
The IRS reporting issue was a major advocacy win for the CUNA-League advocacy team.
Advocacy efforts will focus more on preserving credit unions’ role as financial intermediaries.
Board focus: Legislators’ response to credit unions’ focus on financial well-being for all has been both positive and bipartisan.
He revisits some advocacy wins from 2021, highlights top CUNA-League priorities, and shares how priorities and advocacy approaches may shift in 2022.
Credit Union Magazine: What were some of your advocacy wins in 2021?
The prospect of getting an IRS reporting provision out of a major spending bill was daunting. This provision would have required credit unions and other depositories to track and report funds going in and out of accounts above $600, including breakdowns for cash. It was designed to improve tax enforcement and pay for about a quarter of what began as a $3 trillion spending bill.
The Democrats in Congress really wanted to pay for this bill, which made it tough to advocate against a big chunk of how they were going to pay for it. We had to make it politically uncomfortable, and that’s what we did with credit unions, leagues, and members sending more than 800,000 messages to Congress.
When the spending bill went to the floor, it didn’t include the provision. We’re not quite out of the woods yet, but we’re confident we’ll be OK.
That in and of itself would be a successful year, but so much else went right for us last year, too. The thought that Congress would consider a $3 trillion tax bill on top of a $250 billion spending bill on top of everything spent on COVID without a whisper of changing the credit union tax status is remarkable.
We had a huge win in the Supreme Court on the Telephone Consumer Protection Act, and we had Community Reinvestment Act legislation introduced in Congress that specifically exempts credit unions. We also got two hearings on a bill that would allow credit unions to do more to serve underserved areas.
Q: Were there any surprises last year?
A: The IRS issue was a surprise. At the beginning of the year, that proposal hadn’t been put on paper and it wasn’t on our radar.
Another surprise has been NCUA’s reaction to some of the impacts COVID has had on credit unions. Many credit unions have seen their capital levels fall because of the government stimulus funds going into members’ accounts.
That indicates NCUA doesn’t have all the tools it needs to help credit unions through what we expect will be a temporary situation.
We have encouraged the agency to ask Congress for tools that would allow them to forbear prompt corrective action for otherwise healthy credit unions whose capital levels have degraded because of government stimulus.
Q: How might your advocacy priorities and approach shift in 2022?
A: Credit unions want us to focus more on preserving their role as financial intermediaries. While fintech companies want to take market share from credit unions and small banks, they’re trying to disintermediate the financial system.
Plus, 2022 is a special election year in that it will take place after redistricting. So, new congressional lines are being drawn. In some cases this will pit members of Congress, perhaps some credit union friends, against each other.
And we’ve seen a significant number of retirements, so many open seats will be subject to election. The election year will start sooner in some ways, and it may have already started in terms of Congress slowing down its activity.
In 2022, we don’t expect Congress to do much more than what’s essential to keep the government running. So we need to measure our expectations about what we can accomplish.
‘We succeed because credit unions knock it out of the park for their members.’
A: The response has been both positive and bipartisan. The work credit unions do to improve members’ financial well-being and advance their communities is the 21st-century way to articulate our mission.
By law, credit unions’ mission is to promote thrift and provide access to credit for provident purposes. That’s what financial well-being is all about. We get a positive reaction from policymakers when we look at issues through that lens.
One bill we’re working on, the Expanding Financial Access for Underserved Communities Act, would allow federally chartered credit unions to serve underserved areas and would exempt business loans made in underserved areas from the member business lending cap.
It also expands the definition of “underserved area” to include any location that is more than 10 miles from the branch of a depository institution.
We want to make sure credit unions can serve the nation’s rural banking deserts. We’ve had a positive reaction on this legislation from both sides of the aisle in ways we haven’t seen in the past.
House Democrats put it forward in two congressional hearings, which set us up nicely to try to move it through the Financial Services Committee so it could be included on a must-pass piece of legislation. And this would be a free-market alternative to postal banking, which attracts Republican support and helps us in the long term.
Q: What are the prospects for credit union charter enhancements in 2022?
A: This underserved bill would be part of that, and we’ve been working on a couple of other bills, too. One is the Credit Union Governance Modernization Act, which would make it easier for federal credit unions to expel disruptive members. That moved through the House Financial Services Committee recently.
We also have legislation to increase the maturity limit of federal credit union loans. We’ll try to get these bills as far as we can, let them ripen, and attach them to must-pass legislation.
“Ripening” starts with having the right sponsors for the legislation, taking it through the committee process, and getting a good vote. Getting legislation through the House Financial Services Committee on a voice vote is as strong a message you can get that a bill is not controversial.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
