HR 1151's legacy 20 years later

Published
  • August 07 2018, 12:08pm EDT

Flanked by lawmakers, regulators and CU advocates, President Clinton signs HR1151 into law.

Twenty years ago today, President Bill Clinton signed HR 1151 – The Credit Union Membership Access Act – into law, legalizing the right of credit unions to welcome members from multiple groups instead of a single group. While that may not sound like a big deal to newcomers to the industry today, Aug. 7, 1998 marked the culmination of a do-or-die battle for the movement.

The legislation started out as just a few sentences long and was essentially designed to reverse a Supreme Court decision that hadn’t even come down at the time the bill was first penned. But when the high court ruling in the case formally known as National Credit Union Administration v. First National Bank & Trust—informally referred to as the AT&T Family FCU case among credit unions—the CU movement swung into action.

Just one day after the Supreme Court handed down its ruling in favor of banks, Speaker of the House Newt Gingrich made history when he announced he would be signing onto HR 1151 as a co-sponsor—something speakers rarely do. Within months, the bill would pass the House by a vote of 408 to 11, swiftly followed by a similar landslide vote in the Senate.

By the time the bill reached President Clinton’s desk, it had swollen from just a few sentences to hundreds of pages. The banking lobby demanded many compromises if Congress was to overturn what otherwise would have been an epic bank victory.

When the Supreme Court ruled NCUA was misinterpreting the Federal Credit Union Act by allowing for multiple common bonds within one field of membership, the decision slammed the door on FOM expansions and threatened millions of Americans with being expelled from their credit unions, jeopardizing the very future of many CUs in the process. Credit unions themselves hedged their bets, with hundreds making the move to a community charter, even as uncertainty remained over what might happen to them, as well. Such charters are common now, but in the mid- to late-1990s many CUs served niche markets and were wary of opening to everyone.

In the months leading up to this day 20 years ago, credit unions' now-famed grassroots put in a near round-the-clock effort to get Congress to pass HR 1151, championed by U.S. Reps. Paul Kanjorski (D-Pa.) and Steve LaTourette (R-Ohio).

What became known as the Campaign for Consumer Choice, the fight to shepherd this bill to the president’s desk united credit unions and their often-rivaling trade associations like never before.

Perhaps nothing summed up credit unions' ability to respond to banker attacks than what came to be known as the "hot dog ad." When the banking industry ran an ad in the New York Times that showed a hot dog street vendor and the headline, "I'll Pay More Taxes Than The Credit Union Industry," credit unions went to work after discovering the vendor was just a model. Credit unions responded by finding a real hot dog vendor, Wendall Sisler, who had been laid off and couldn't get a loan from his bank, so he went to his credit union where he got a real loan for his real hot dog stand.

"I repaid my start-up loan. But I can never really repay my credit union for believing in me," Sisler said in an ad that appeared in Washington media.

As credit unions celebrate the 20th anniversary of the Credit Union Membership Access Act, CU Journal asked credit union advocates to talk about the legacy of HR 1151.'

Dave Adams, CEO of the Michigan Credit Union League

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

The Supreme Court decision that limited FOM charter expansion had dire implications for credit unions. The long-term impact was far greater than just the FOM fix and the associated tradeoffs on things like the member business lending cap and the credit union to bank charter conversion provisions.

The real impact was that we beat the bankers and sent a strong signal that credit unions have the ability to rally bi-partisan Congressional support against the bankers’ self-serving attempts to limit access. We won and the bankers lost. It was a battle they felt they had to fight but this victory set a tone for future lobbying efforts.

As for negatives, yes there were tradeoffs in the legislation that placed the first-ever cap on member business lending as well as provisions that would at least temporarily make it easier to convert to mutual savings banks. But on both of these issues, subsequent federal regulations have lessened the impact of those issues.

The positives of HR 1151 significantly overshadowed any of the negatives. Successful advocacy almost always comes with tradeoffs.

How has the credit-unions-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

If anything, bankers’ attacks have weakened and become less impactful. Bankers associations are increasingly divided between the bigger banks who don’t consider credit unions to be a threat, vs. the community banks who can’t seem to survive competitively against big banks or credit unions.

Community banker associations are compelled to go after the credit union tax exemption and to limit charter improvements at the state and federal levels. But again, victories like HR 1151 set a positive tone for many years to come. Bankers associations are really fighting battles that they know are unpopular with both lawmakers and consumers. That’s an unenviable place to be for a lobbyist. With the bank brand so severely damaged by the bad actors who led to the great recession and by the ongoing anti-consumer practices that are so regularly in the news, larger banks are more reluctant to take on unpopular positions like attacking credit unions.

The American Banker once called this the bankers’ “dirty little secret”, that their lobbying efforts on the credit union tax exemption constitute a “battle that they must fight, but know they can’t win.” And they often try to fight quietly and sneakily in the courts and with regulators outside the oversight of public opinion where they almost always lose.

The credit union industry and their associations know that the bank vs. credit union battles associated with the tax issue and charter improvements, will always be challenging. But in an era where issues like regulatory burden and data breaches have become our member credit unions’ greatest concerns, we’re actually aligned with bankers’ associations on those fronts.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

The answer is in the question. In order to win large, impactful legislative victories more quickly, the issues need to be almost “do or die.” And member credit unions and consumers need to see the importance of the issue that way. If our tax status is ever seriously threatened for instance, we would be fighting a “do or die” issue and I’m confident that we would prevail in a resounding way. However, on more complex issues like the regulatory relief, raising the MBL cap, updates to the FCUA, avoiding pricing restrictions on overdraft fees and card interchange fees, and other such issues, the process is more protracted and difficult.

How do you think the credit union movement has changed – for better and for worse – since then?

Size, market share gains and overall success bring greater scrutiny. But they also come with greater political clout and respect from lawmakers. Consolidation and concentration of business into fewer, but larger and more diverse credit unions constitute the most fundamental change in the industry.

But as long as credit unions large and small stay true to their purpose, the industry will succeed in its important advocacy efforts. That purpose is to bring affordable financial services to consumers and small businesses in ways that strengthen the economy and create opportunity, especially for all, but especially for those who are financially challenged. And telling the story of how credit unions do this in ways that are unique to their not-for-profit status is of paramount importance as we seek to preserve the tax-exempt status and improve our charters.

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Dan Berger, president and CEO of NAFCU

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

The law helped to stabilize the credit union industry and, quite frankly, allowed it to continue to exist. However, more could still be done to allow credit unions to serve underserved communities. For instance, the member business lending cap should be lifted, and revisions to the prompt corrective action regulation would be beneficial.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Credit unions’ non-profit status was reaffirmed by the Credit Union Membership Access Act, and recent tax reform measures left that provision in place. The facts on the matter are clear. The credit union tax exemption provides members with billions in savings, the federal government with billions in additional overall tax revenue, and the economy with hundreds of thousands of jobs.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

The passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) was a great example of what can be achieved when banks and credit unions work together to pass needed regulatory relief. Credit unions have a robust grassroots network, and our members are ready and willing to engage in public discourse when reforms are necessary.

How do you think the credit union movement has changed – for better and for worse – since then?

The industry is stronger and more mainstream as a result of credit unions’ dedication to their membership. More Americans are joining credit unions today than ever before as a result of better service, better rates, and a better mission.

Dave Chatfield, former CEO of the California and Nevada Credit Union Leagues

Our efforts for HR 1151 were definitely worth it. We would've seen many setbacks in subsequent years if we hadn't developed our political strength at that time. It reflected the maturing of our credit union political action system, which was essential to our future. It showed what people coming together can accomplish.

HR 1151 was essential in securing the future of credit unions. If we hadn't been able to solve the multiple-group FOM problem eventually created by the Supreme Court's decision in 1998, credit unions might have had to expel millions of members. That would have been a financial and reputational disaster. At the very least, it would have halted our growth and probably resulted in the withering away of our credit union system.

It led to many credit unions to reach out to the unbanked and underserved. It heightened awareness of why credit unions were chartered in the first place.

Bill Cheney, former CUNA CEO and current president and CEO of SchoolsFirst FCU

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

HR 1151 in many respects saved the credit union movement. It wasn’t perfect, but without it, federal credit union membership would have been devastated, including the very real possibility that some members would have had to have been expelled.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Credit unions certainly showed formidable political strength with HR 1151. The ability to pass legislation so quickly and with such strong bipartisan support was a huge win with long lasting impact. Banks have not backed down, however, and it is critical that we continue to stick together to ensure future success.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

Crisis helps to focus those most impacted. Let’s hope we never face this type of crisis again. Credit unions need to be prepared for a fight. We have proven that when we need to get something done, especially in terms of protecting our business model and our members, we are willing to do so. Engaging credit union members in the political process for the benefit of their credit union is crucial.

How do you think the credit union movement has changed – for better and for worse – since then?

Credit union membership and membership growth have been expanding at record levels since 2011. This growth is a true measure of success.

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Dennis Dollar, principal of the Dollar Associates credit union consulting firm and a member of the NCUA board in 1998 when HR 1151 passed.

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

Having followed and essentially overturned a U.S. Supreme Court opinion that could have resulted in severely restricting the necessary diversification in credit union field of membership and therefore leaving credit unions unable to grow, the passage of HR 1151 basically kept credit unions in the marketplace and protected consumer choice that would have left consumers over time with only the choice of which bank they wanted to use. Its long-term impact is visible today in the safety and soundness of credit unions as a whole and with the option of planning for strategic managed growth in the future for individual credit unions. While credit unions took a couple of lumps along the way with an arbitrary cap on member business loans and an inflexible net worth regime with a one-size-fits-all 7 percent trigger on retained earnings to be well capitalized, it is still safe to say that HR 1151 was the salvation of the credit union option as a consumer choice for millions – now hundreds of millions – of Americans. No doubt it was a big deal for the credit union industry.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

The bank-versus-credit union battle has continued unabated since then, and the bankers continue to fight at every turn any statutory or regulatory action that enables credit unions to be more competitive in the marketplace. Even though credit unions have essentially the same percentage of market share 20 years since the passage of HR 1151, banks continue to try to convince Congress that credit unions are somehow the reason community banks has fallen from 50 percent of the market to around 18 percent of the market – even though their big bank brethren have increased from 30 percent to 75 percent of the market. The bankers haven’t had much success with that argument because banks are doing quite well even with what they call an un-level playing field in competing with credit unions and our 7 percent of the market. You don’t see many banks – how about none – converting to the credit union charter to take advantage of our un-level playing field advantage.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

Credit unions are a viable consumer option that Congress recognized in an overwhelming bipartisan manner in 1998. Although the Supreme Court decision helped to galvanize that support into relatively quick congressional action in 1998, I believe that Congress today – if faced with the loss of credit unions as a consumer choice in the marketplace – would again side with consumers and credit unions if the same battle for survival was on the table. Both Republicans and Democrats alike are strong credit union supporters and, even though the bankers continue to push for ending the tax exemption as they have since it was enacted in 1934, it isn’t good politics to risk angering 100 million-plus credit union members and voters to pick up less than $2 billion a year against a $21 trillion national debt. That is like trying to empty the Pacific Ocean with a Dasani [water] bottle. I think credit unions will be able to continue to protect the tax exemption as long as they stay engaged politically and tell their story of consumer benefit. Whether they can get expansions of their authorities is a tougher battler, but credit unions proved they were a major player with HR 1151 in 1998 and remain a force to be reckoned with based upon that experience on Capitol Hill. HR 1151 was a victory that is still remembered, inside the industry, among the banking competitors and on Capitol Hill 20 years later.

Michael Fryzel, attorney and former NCUA board member

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

The passage of HR 1151 was the spark that propelled credit unions to become a dominant force in the financial services industry. Since that time they have grown in stature as they continue to add ten of thousands of individuals every year to their membership roles. The only fault of the legislation was that it did not go far enough in allowing credit unions to serve even more people and provide the regulatory relief credit unions are now getting only decades later.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Banks, for reasons no reasonable person can understand, have since that time felt threatened by credit unions. At every opportunity they complain that credit unions hurt their ability to prosper and should be restricted in who they serve. Rather than pursue a campaign of providing more and better services to their customers, the banking associations would rather spend their time criticizing the efforts and successes of credit unions.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

This year credit unions rallied to support regulatory relief regulation introduced by Congressman Henserling and Senator Crapo. They worked the Hill to get their representatives and senators to join in supporting the legislation again showing that when called to battle they know how to respond and get the job done.

How do you think the credit union movement has changed – for better and for worse – since then?

Aside from a hiccup in 2008-2009, during which the industry showed strength and resilience, the movement has grown and continues to show itself to be the premier financial services industry in the United States.

Paul Gentile, president and CEO of the Cooperative Credit Union Association

Putting the issue aside of FOM constraint, the biggest impact of H.R. 1151 is it showed that the credit union system could come together and implement a powerful grassroots advocacy strategy. It had never been done before to that scale and since that time, we have not orchestrated the type of grassroots that we saw in 1151, but we have become tremendously more advanced in the ability to do that if need be. The birth of Credit Union House, the creation of proud credit union advocates at credit unions and leagues, and the ability to get consumers engaged if need be to support their local credit union were all hallmarks of 1151, and those impacts live on with us today.

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CUNA Chief Political Officer Richard Gose

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

Our grassroots and advocacy efforts have steadily improved over the past 20 years. Credit unions know firsthand the importance of being involved and how serving their members is a major differentiator.
On the negative side, there have been many more regulations that keep credit unions from serving their members to the fullest potential.

How has the Cs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Banks have been trying to limit credit unions’ ability to serve their members in restricting services and the threat of taxation since before HR 1151. In the past twenty years it has only intensified.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

I think the threat of losing members or services invokes a strong reaction from credit unions. The difference is the Congressional process and the ability to move legislation. Today grassroots is more of an ongoing conversation than a sudden take action.

How do you think the credit union movement has changed – for better and for worse – since then?

I think there are more credit unions engaged in the political and legislative process. We are not as shy as we were 20 years ago.

Lucy Ito, president and CEO of the National Association of State Credit Union Supervisors

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

In 1998, NASCUS viewed HR 1151 as critical to ensuring that the federal charter remained viable. As such, the organization worked diligently to pass the legislation and thus preserve the dual chartering system. A notable NASCUS achievement in HR 1151 was the inclusion of language that requires NCUA to consult with state supervisory agencies in enacting member business lending and Prompt Corrective Action rules. Unfortunately, the bill placed an unnecessary statutory limitation on MBL and failed to provide a supplemental capital mechanism for most credit unions. As a result, federally insured credit unions’ ability to serve their members was constricted, hurting the American consumer. However, despite those shortcomings, the measure enabled credit union memberships to grow in ways that buttress safety and soundness.

How has the CU-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Competition between credit unions and banks has increased as credit unions are given the flexibility to offer more products and services and serve more members. However, despite the competition, there are areas where credit unions and banks have partnered to address issues faced by both industries. An example is advocating that retailers be subjected to the same cybersecurity standards as financial institutions.

How do you think the credit union movement has changed – for better and for worse – since then?

Over the last 20 years, the credit union movement has strengthened tremendously. More and more Americans are choosing credit unions as their primary financial institutions. In 1998, the total assets held by credit unions were just over $354 billion. Today, those assets have increased to $1.4 trillion. Credit unions are growing in spite of the continuing risk-based capital debate and their lack of access to the supplemental capital. The anniversary of HR 1151 is a reminder that Congress intended for NCUA to work with state supervisory agencies to develop risk-based capital rules and that the industry should continue to advocate for credit union access to supplemental capital — which was omitted from HR 1151 and viewed as a major flaw of the bill.

Randy Karnes, left, CEO of CU*Answers. Karnes is pictured here with credit union consultant Susan Mitchell, whose thoughts on HR 1151 appear elsewhere in this story.

What do you see as having been the long-term impact – both positive and negative – of HR 1151?
I wish we would have found a better rallying call for such a moment in the political spotlight. 1151 showed that cooperative agents could harness the political clout of consumers to manipulate – good and bad – the playing field for CU organizers and professionals.

But [it] proved almost nothing as to their interest in changing the landscape of financial services towards the activation of credit union ownership’s vision for a better cooperative financial service landscape. We changed the competitive nature of the banking conflict but not the opportunities for local endpoints for consumers and the way they own the solutions.

1151 simply aligned banks and credit unions for a more common set of competitive factors and enhanced the ability for CUs to be more like banks than distinct entries recognized with clear differentials. It made for a better fight - but not for a clearer choice. 1151 was inevitable due to competitive desires to be on par with the wrong competitors and game – good for the profession, but bad for the spirit in the end.

Individuals and local organizations are best served by rallying their funds to survive the outcomes of political processes instead of fighting to determine them.

How has the CU v banks battle changed in the last 20 years since HR 1151 was signed into law?
Repeating history – it will take two major changes. First the political environment is too conflicted for majority actions where an idea can win with both sides agreement. Today no one would grant their opponents a win. But more importantly, banking and credit union issues are more about turf wars than the philosophical elements of profit-based banking versus cooperative, consumer-owned local value concerns. Mom and pop win moral nods of support but not big battles where big business constructs might [be] damaged.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?
If 1151 was a highlight for the size of the rally, the win for process sake or competitive rules – it was nice for those wanting to rally but potentially off-point for those needing a difference to count on.

How do you think the credit union movement has changed – for better and for worse – since then?
Today versus 20 years ago – the things that matter have changed very little – credit unions survive on the transactions to enhance consumers lives one at a time. The sincerity of the model is not the acclimated score of an industry, it is the heart of aiding the agenda of a member one individual, one local community and one event at a time.

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Paul J. Lucas, longtime credit union marketing and branding consultant

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

The restrictions on membership, with a focus on members having a common bond, would have become increasingly difficult for credit unions to adapt to due to changes in banking and in the workforce. When credit unions first emerged as a banking option decades ago, many credit unions offered on-site “banking” to people where they worked. That connection between the workplace and credit unions was still common at the time HR 1151 was passed.

In the ensuing 20 years the way we work, the way we bank and the way we pay for purchases have changed dramatically in this country. Many workers are now connected to their workplace by computer as they work at home, or at locations closer to customers than the main office. Many account holders at banks and credit unions no longer visit a branch weekly, and many account holders never visit a branch. Electronic banking options have replaced the teller line.

If credit unions had not been able to expand their membership to include members with common bonds instead of a single bond, it’s likely that many credit unions would not have survived. The industry is constantly being challenged by fundamental changes in the ways people live and bank in America: shift from rural to urban population centers; the decrease in manufacturing (manufacturing facilities often house credit unions for large employee groups); remote banking options from direct deposit to mobile check deposit; automatic bill pay, etc.

The expansion in membership also provided opportunities for small, local credit unions to maintain the critical mass of active members needed to manage the increasingly high cost of the electronic banking products and services needed to stay competitive in banking.

I cannot offer a negative impact of the legislation. It allowed us to survive and compete against major banks.

How has the CUs vs. banks battle changed in the last 20 years since HR 1151 was signed into law?

Some credit unions continued to test the boundaries of membership. Over the past decade, some credit unions began advertising that anyone can join. That resulted in the banking industry’s effort to have the not for profit status of credit unions eliminated because they were competing as banks instead of service providers for members with common bonds. The taxation of credit unions was avoided, but credit unions seemed to become more careful in how membership bonds are explained in marketing information.

What do you think it would take for credit unions to mobilize a do or die grassroots movement today?

The industry has not been able to launch a sustained, impactful marketing effort to educate consumers on the benefits of credit unions as compared to banks. If we can’t do that, then it’s easy to assume that it does take a “do or die” mentality to unite our industry and to inspire meaningful action.

How do you think the credit union industry has changed?

Today even small and medium-sized credit unions offer products and services similar those offered by major banks. We are better able to compete on a more level playing field. In addition, as convenient branch locations become less important to consumers, we will be even better positioned to compete. Good credit unions can offer services that are cheaper, more personalized and, in some instances, even faster than banks. That creates even more opportunity for growth. However, we have to sell that to consumers.

Consolidation in our industry should result in more credit unions that have the resources and the presence in the marketplace to build market share among consumers who have the resources to be active, profitable members. Many of those prospective active members do not qualify for banks’ private banking packages that reward affluent customers with lower cost products and services, at the expense of good bank customers who should be more valued by banks. That includes younger members. Millennials are a great fit for credit unions – they just don’t understand yet what we have to offer.

I’ll add a final question: What is one way credit unions still need to change to remain completive?

Credit unions today have more highly trained CEOs, lending managers and other financial executives. However, as an industry, we need to embrace the need for experience professionals in the “softer” areas: marketing and member services. Banks don’t promote tellers directly to marketing manager. They hire professionals.

John McKechnie, a senior partner at Total Spectrum consultancy in Washington and in 1998 vice president of legislative affairs at Credit Union National Association

The campaign was undeniably positive – credit unions united to pass legislation that the movement needed to have if we were to have any future in the marketplace. And in the process we demonstrated the power of smart, focused credit union political action. It was a moment when we harnessed our grassroots to produce a win in a battle that very few people in Washington initially thought we could win.

I think the bankers have [since] gotten better at activating their grassroots – that’s not to say that they are our equals, but they certainly give credit unions a run for the money when it comes to engaging hometown bankers who carry their message. Bankers now seem to be perpetually angry about credit unions, and that anger translates into a great deal of energy in the political arena. That’s unfortunate – if they only devoted more of that energy into serving consumers.

It’s a bit of an overstatement to say that the victory was as overwhelming for credit unions as it appears it at first glance. Yes, the final vote tally in both chambers were tremendously lopsided in our favor, but there were times in House and Senate Committees where we almost lost, or at least almost had to swallow unacceptable requirements on CRA and even more onerous restrictions on small business lending than were eventually part of the legislation. Those close calls have been largely forgotten in the mists of time, but they should be remembered, and should serve as a reminder that the campaign to pass HR 1151 was a tough, hard-nosed, and very high stakes battle.

Amy McLard, executive director of advocacy at the Heartland Credit Union Association

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

HR 1151 taught credit unions that if they band together on an issue they can have a tremendous impact and spark change. Lawmakers learned the collaborative impact credit unions have and have come to respect the grassroots power we can wield. We have developed system-wide grassroots tools specifically designed to harness this power. Our leagues have developed and maintain strong advocacy teams focused on moving the credit union industry forward, working on the state level as well as together with CUNA on federal issues.

How has the CUs vs. banks battle changed in the last 20 years since HR 1151 was signed into law?

Credit unions of all sizes are stronger together, and banks trying to define us or how/why we should exist must be countered and stopped. One-on-one contact with lawmakers is vital – that hasn’t changed in 20 years. How we communicate that has changed – from fax and mail to social media and email. But the power in telling our story – sharing how your credit union made a difference for a member – remains as important as ever.

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

Regulatory-based challenges can be harder to translate to the member level. Overall, we’ve seen that unless it is a REALLY BIG issue, it’s harder to get credit unions to engage with their members. But what is that “big issue?” For a broad-based impact, anything that inherently challenges the core of credit union differentiation. Taxation would be a big motivator – and we saw credit unions take action with the “Don’t Tax My Credit Union” effort.

How do you think the credit union movement has changed – for better and for worse – since then?

We are smaller in numbers but larger in number of members. That puts added scrutiny on the few, and added responsibility to continue to differentiate ourselves from other financial institutions in a positive way.

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Susan Mitchell, CEO of Las Vegas-based financial consultancy Mitchell, Stankovic & Associates

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

Interesting question. At the time, this was a rally call and demonstrated the power of the credit union grassroots effort. We joined the movement and worked closely with our clients and California Credit Union League’s CEO, Dave Chatfield to support marketing and communication. The signing of HR 1151 was celebrated as an achievement by and for the people!

Hindsight is always done with a critical eye. I don’t believe anyone anticipated that HR 1151 would also limit future business practices with items such as Section 203 on Member Business Lending and Title III, definition of Prompt Corrective Action. Internationally, microloans and small business loans were a big part of community demand, we could have collaborated with World Council [of Credit Unions] to see this coming.

How has the CUs vs. banks battle changed in the last 20 years since HR 1151 was signed into law?

In some ways the battle with the banks remains the same – the message in the market still positions credit unions as the good guys and banks as the bad guys. We lump all banks and credit unions into the same categories. This generality is not relevant today. There are BIG banks and there are BIG credit unions and then there are the “others” who are struggling to serve, grow, and remain relevant. Both credit unions and community banks were meant to serve “people” in different ways – one as a not for profit, member owned cooperative and the other as a for profit oriented, community investor. Both have been negatively impacted by regulations and the Fintech world. While we focus on the CU vs bank battle, 20,000 payday lenders (some owned by BIG banks), are filling the gap. Isn’t it time for a new tactical plan – a battle for the people?

HR 1151 flew through both the House and Senate in record time and with landslide votes in both chambers, largely because credit unions saw this as a “do-or-die” situation and got out their now-famed grassroots to lobby Congress. What do you think it would take for that to happen again today?

A revolution? Truly, to reach consumers today, the message has to be exaggerated or inflammatory and result in a hashtag moment. When we look at the overall industry statistics, leaders will argue all is well within the industry. It’s true. There is growth – primarily the large credit unions. Lending is increasing – primarily auto lending. Membership increase – average age of the member remains over 45 (depositors over 70). Through tighter credit scoring criteria – an expectation by the regulator – CUs missed the proverbial boat on immigrants that may have helped decrease the average age. I know it isn’t politically correct to question the success of the industry, but I do believe credit union movements such as Canada and Australia might give us an idea of what is on the horizon – taxation and conversion to mutual, as allows by HR 1151, Section 202. II may be time to say #saveCUownership #financialinclusion #standupforyourCU!

How do you think the credit union movement has changed – for better and for worse – since then?

The credit union movement has changed to reflect the current times; not for better or for worse, just a reality. People are less about people helping people. Regulators are more about saving the insurance fund. Financial services have become a necessary commodity until you really need someone and then who will listen?

People helping people to help themselves was a term Patsy Van Ouwerkerk used recently and it resonated with me. I am passionate about the purpose of credit union cooperatives, diversity, financial inclusion, social responsibility and truly making a difference. There are great stories with emotional connections to credit unions and many voices that are just as passionate, just as committed and relentlessly dedicated to the credit union movement. In that way, nothing has changed over the last 20 years! Except the message is lost. Our voices are drowned out by the white noise of digital communication and the end result is consumers are losing a connection to ownership, to cooperative principles and to the relevance of the credit union movement.

Mike Moebs, economist and CEO of Moebs $ervices

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

The positive is that it established cooperatives, in particular, in the CU movement, where it should have been in the 1930s. In other words, a CU could start, it didn’t have to be associated with a particular group, it could be associated as a community credit union or even more. From the aspect of community credit unions, it was good. They were substantially improved. There was consolidation in the industry. And we had a situation where all of this has ended up being good for the credit union movement.

I think the chief negative is that it made the bankers angry at the credit unions. I don’t think that was a good thing that came out of it, [but] it was something that the credit union movement had to do. The other thing that was negative was because of the consolidation, we lost credit unions. We lost a little bit of a personal touch because of this consolidation, but that was inevitable. These were minor negatives.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

It’s like boxing. Credit unions threw a punch, bankers knocked them down, and then credit unions came back and knocked the bankers down with the Supreme Court legislation. With 1151, credit unions could say that ‘I’m a boxer and I’m in the same weight class as you. You knock me down and I’ll get up and knock you down.’

How do you think the credit union movement has changed – for better and for worse – since then?

I think it definitely has changed for the better. Prior to 1151, there were a lot of institutions that were in the credit union movement that were too small [and] who were highly inefficient, but what happened after 1151, as consolidation started to be done under community charters [among others], I think the CU movement definitely became better. I think it got up to the point in size where it could deal with just about any bank or financial institution in size.

Cliff Rosenthal, who in 1998 served as president and CEO of the National Federation of Community Development Credit Unions

What do you see as having been the long-term impact – both positive and negative – of HR 1151?

HR 1151 ushered in the introduction of Prompt Corrective Action – a regime of capital requirements accompanied by increasing rigorous sanctions for credit unions that fell short. In my view, this was a very painful tradeoff, especially for many small credit unions. It accelerated the decline of many of these institutions and the concomitant consolidation of the credit union industry. It is easier – and, in my view, unfair – to attribute the decline to the CFPB, but I think regulations like PCA play a major role in the stress and decline of many credit unions. Certainly, that has been true among credit unions serving low-income populations, which by the nature of the communities they serve have a doubly hard task in accumulating capital, or net worth.

So, on net, credit unions serve more people than they ever did. They've survived the Great Recession. Did expanded fields of membership contribute to their survival? Hard to say. But the counterfactual – narrower fields of membership – probably would have increased the casualties of those difficult years.

How has the CUs-versus-banks battle changed in the last 20 years since HR 1151 was signed into law?

Obviously, it enabled credit unions to retain, and then substantially expand, the constraints of a narrow field of membership. The battle, though, never goes away – banks keep pushing back against credit union expansion, and of course use it as convenient in the effort to tax credit union. In my view, "field of membership" and "common bond" are archaic vestiges of the earlier evolutionary stage of credit unions. There are credit unions today with official fields of membership in the millions of people; the notion of common bond is a legal fiction without compelling substance behind it. My position, simply put, is that a credit union should be able to take in anyone who finds its social mission, its services and its treatment of its members attractive – full stop!

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Jared Ross, SVP of association services & governmental affairs for the League of Southeastern Credit Unions & Affiliates

Credit unions continue to want to serve their members in the best possible ways, while banks want to continue to limit what credit unions can do, always using the tax status as their lynchpin argument. What has changed, at least in the years I have been involved in the movement, is that lawmakers tend to see the bankers’ arguments for what they are, self-serving and lacking merit. Credit unions have done a great job of building the important relationships on the Hill, and we need to continue to tell our compelling story.”

I think the biggest uniting issue on the Hill for credit unions is the tax status. We’ve seen it over the years, whether it be the “Don’t Tax My CU” movement, or the amount of contacts that were made on the Hill during the latest efforts on tax reform. Any type of legislative battle that truly threatens the credit union co-operative model is going to draw tremendous grassroots support.

Without having the historical perspective of what the battle for HR 1151 was like, I would say the credit union movement continues to evolve and to me, that’s for the better. The passion for the industry remains, but the [number] of credit union advocates continues to increase, and that can only benefit our industry in the future.

Marc Schaefer, CEO of Truliant Federal Credit Union, which in 1998 was known as AT&T Family FCU

With more than 115 million U.S. consumers choosing credit unions and securing the benefits of lower loan rates, better savings rates, lower fees and trusted guidance in their best interest, the beneficial impact it has had would be hard to dispute. Had the Credit Union Membership Access Act not passed, millions of U.S. consumers would be at the mercy of bank practices and pricing. For-profit banks are incentivized to maximize profits even when it is at the expense of their customer. Without the credit union alternative, the costs borne by the consumer over the last two decades would be enormous and incalculable. Even bank customers have benefitted from the market discipline imposed by credit unions being viable and relevant to the consumer. Given the net benefit to the economy and the U.S. taxpayer of credit unions demonstrated in multiple recent studies, there is no downside to this important public policy decision taken by courageous legislators twenty years ago.

The banking industry has had a lot more to worry about than credit unions. Their reckless practices in the subprime mortgage business followed by U.S. taxpayer bailouts (TARP, etc.) have kept them busy. Attacking credit unions during that time when we were helping the consumer and small businesses victimized by the subsequent economic collapse would have been unseemly and unsuccessful. Hopefully, consumers and small businesses don’t forget the hard lessons of the past. Having a diverse and viable alternative to for-profit banking is essential to the individual and to the U.S. economy. The largest banks that survived were rewarded by growing even larger and now constitute essentially an oligopoly where consumers only have a few to choose from. Community banks have been busy buying each other out to reward their investors and now are trying to form new ones to repeat the cycle -- not necessarily in the interest of their customers. Because banks are incentivized to eliminate competition to maximize profits, their trade associations, at their behest, will continue to attack credit unions’ right to exist, grow and modernize to remain relevant to their members.

Speaking with a banker recently who was involved in the lawsuit, he recalled the legislative victory (HR 1151) as “overnight.” It was actually the time from February 1998 when the U.S. Supreme Court ruled in the ABA’s favor to August of that same year when President Clinton signed the Credit Union Membership Access Act into law. We had gotten busy with the legislation back in July of 1996 when the ABA got legal ‘standing’ and after the case had moved to the U.S. District Court of Appeals for the District of Columbia that historically had been friendly to the banking industry. Still, in comparison to the slow-as-molasses legislative process in Congress today, it was remarkable and demonstrates what can be done when credit unions, our trade associations and our members work together. It is certainly preferable to avoid close-calls of extinction than to fight them and part of the problem in the 1990s was that Congress and the general population was mostly uneducated on credit unions. Threats of a similar nature such as the recent Tax Reform legislation were not ‘do or die’ because we are in a much better position than we were then. CUNA and NAFCU and individual credit unions have done a much better job of working with Congress, state legislatures, the U.S. Treasury and the executive branch to make sure they understand the important role credit unions play in the lives of their constituents and in the general economic health of the United States. At Truliant, we never forgot the lessons of the bankers holding all the cards and we devote significant time, money and human resource -- both staff and volunteers -- to engaging with public policy makers. However, if challenged, we believe we could re-activate our members to become pro-active in the fight because we have never stopped educating them on their ownership of the credit union. They experience the value of that ownership on a personal level and would fight if it were threatened, particularly by the banking industry.

The CUMMA actually helped to re-invigorate the commitment to the philosophy and culture unique to credit unions. It made us realize that we had to be able to differentiate credit unions from banks or we would be eliminated as an option (as the S&Ls were when they insisted on becoming commercial banks). The heart-felt support from our members and staff essential to the victory was another powerful reminder of our obligations as a member-owned financial institution. Even credit unions that were leaning toward being more ‘bank-like’ couldn’t ignore the powerful forces of consumer expectations and the growth potential available with the charter. The ensuing meltdown of the banking industry, Bank Transfer Day, Wells Fargo Bank scandals and a general mistrust of the banking industry continues to reward credit unions that truly demonstrate their commitment to their membership and communities by differentiating their policies and practices. Because our mission is to improve our members’ lives, credit unions have continued to modernize and provide the advanced delivery channels and simple, convenient access to a rich portfolio of services that they demand. Notably, credit unions, because of our structure, can provide guidance in the members’ best interests and that is even more important than the service itself. Hopefully, we are getting better at making more consumers aware of the value and availability of credit unions as a viable option to help improve their lives. Credit unions are more appealing than ever to the U.S. consumer, including younger members, but we must remain committed to protecting and expanding the ability to serve our members, making sure we never lose sight that they are the reason we exist as an option to banking.

Dan Schline, president and CEO of the Carolinas Credit Union League, who started with the North Carolina Credit Union League in 1997 as a grassroots coordinator for the HR 1151 effort there

Credit unions have a common purpose that unites us on behalf of the members we serve. That was evident twenty years ago during the HR 1151 fight and is true today. The legislative changes that came through HR 1151 preserved the option of credit union membership for millions of Americans. As a result, credit unions are providing affordable financial services to 5.5 million members in the Carolinas. This wouldn’t have been possible without the strong support of Congress 20 years ago and today.