During a Congressional cycle in which a host of long-serving legislators have announced their intentions to retire or step down, one exit may sting the credit union movement more than the rest.
U.S. Rep. Ed Royce (R-CA) announced Monday his intention to retire from Congress at the end of this term, who has earned a reputation for being a credit union champion, having introduced a number of pro-credit union bills during his tenure.
“There are a lot of credit union supporters on Capitol Hill, but Ed Royce is a credit union champion. Those are few and far between. He will be missed by credit unions,” observed Dennis Dollar, a former chairman of the National Credit Union Administration who now runs an Alabama-based consultancy.
“He’s been a credit union friend and a credit union supporter – not only a supporter but a do-er,” said Geoff Bacino, a former NCUA board member and a credit union consultant in Washington. "He backed everything up. We’ve had guys over the last handful of years who we like to call supporters, but when push comes to shove they kind of come up soft. Ed Royce never came up soft.”
While credit unions have many advocates on both sides of the aisle, Royce went beyond basic support by sponsoring legislation specifically aimed at helping credit unions, including 2005’s Credit Union Regulatory Improvement Act, an attempt to roll back a number of compromises the movement made in order to help assure passage of the Credit Union Membership Access Act – chiefly the cap on member business lending. Royce also introduced the Credit Union Residential Loan Parity Act, which removed one-to-four-unit non-owner-occupied dwellings from the MBL cap, and the CU Small Business Jobs Creation Act, which would have raised the MBL cap from 12.25 percent of assets to 27.5 percent, among other CU-friendly bills.
“Ed Royce was one of those members of Congress who saw the value in giving credit unions more tools with which to serve the consumer marketplace,” noted John McKechnie, a CU consultant and former staffer at both NCUA and the Credit Union National Association. “He believed in modernization, in updating the kinds of things that credit unions can do – and that showed in the way he tried to help us with member business lending and [the CU Residential Loan Parity Act]. He recognized the need to help credit unions stay in step with the marketplace and evolving consumer demand. At a time when a lot of members of Congress are constantly being pressured by the banking industry to be sure credit unions don’t evolve, he was one of the ones who encouraged it and had the smarts to realize [not evolving] doesn’t help anyone and it certainly doesn’t help consumers.”
CU supporter, supported by CUs
Royce had heavy backing from the credit union movement throughout his career, with CUs his eighth-highest donor as an industry. Credit union political interests gave more than $563,000 to his campaigns since 1989, though that was topped by commercial banks, which donated more than $586,000. Real estate and insurance PACs topped the list, both giving more than $1.6 million to the candidate.
Sources said it’s unclear where those monies will be redistributed in Royce’s absence,
“We obviously have been working to broaden credit union support and have a number of members – that are oftentimes newer faces, so may not have the same tenure in Congress – that we’ve been working with on both sides of the aisle to understand credit unions and that are very supportive of credit unions,” noted Brad Thaler, VP of legislative affairs at the National Association of Federally-Insured Credit Unions.
Similarly, Jeremy Empol, VP of federal government affairs at the California and Nevada Credit Union Leagues, noted that CUNA’s Credit Union Legislative Action Council exists to help fund candidates who will be strong advocates for the movement.
“We want to make sure we always have a strong PAC to help us along the way with our political aspects,” he said.
Ryan Donovan, chief advocacy officer at CUNA, reminded that the more than $560,000 Royce's campaigns have received from the movement also likely include donations from individual credit union executives and volunteers, but emphasized that the trade association will continue to work closely with state leagues in determining which candidates to support with PAC monies and how those funds will be allocated.
"Even as folks who have supported credit unions over the years decide to retire, we have a number of supporters in Congress and i am confident that there will be a credit union majority elected in November," he said.
Paul Merski, EVP of congressional relations and strategy at the Independent Community Bankers of America, noted that Royce “was always a reliable vote for the community banking sector on many, many issues, most recently in pushing for needed reforms on BSA and money laundering rules.”
But Merski balked at the suggestion that the retirement of such a strong credit union advocate might give the banking lobby a leg up when it comes to advancing the repeal of the credit union tax exemption.
“The tax disparity aside, there’s plenty in common between the credit unions and community banks to roll back onerous regulations,” he said, adding that with so many high-profile legislators announcing their retirements, “we’re looking at a whole different ball game, possibly, for what could be the makeup of the House of Representatives.”
For its part, the American Bankers Association noted that "Although we differed on issues of credit union regulation and oversight, [Royce] always took time to listen to the concerns of bankers in his district," said Jeff Sigmund a spokesperson for the banking trade group.
The next Royce?
It’s unclear who might be “the next Ed Royce,” though sources offered a variety of explanations as to where the movement’s next Congressional champion might come from.
“Sometimes I find the problem in D.C. is if someone has that portfolio, other people try to steer clear or defer to him or her,” observed Bacino. “I’m hoping this means some of those [legislators] credit unions have been courting for a couple years will step up, but it remains to be seen. It could be anybody. Ideally, in the situation you’re in now where Republicans control the White House, Senate and House, a Republican is probably the better bet, but that could all change come November.”
“One of the things you’ve got to take into consideration when you think about the enormity of support that we’ve received from Representative Royce over the years is that it’s probably a) unrealistic and b) imprudent to think one single member of Congress could fill that gap,” observed CUNA's Donovan. While the trade group continues to work with its state league partners to cultivate strong credit union supporters throughout Congress, in recent years – since around the time the association switched to a “choice model” for affiliation, said Donovan – CUNA has increased its coordination with state leagues in order to get involved in races earlier, as well as “in other cases, using independent expenditures and partisan communications to support candidates running for Congress.”
“It takes a lot of time and commitment between the credit unions and [legislators] and CUNA to really take the time to develop such long-term relationships,” reminded the California league's Empol, adding “Can another champion be built? Absolutely.” He pointed to Reps. Mark Amodei (R-NV) and Pete Aguilar (R-CA) as two legislators who are both credit union members and have longstanding relationships with their state CU leagues dating back to before they entered Congress.
“There are a lot of relationships…that can be fostered and eventually they do become champions,” he said. “Can another Ed Royce be there? Yes – but can anyone be as great as Ed Royce? Those are very big shoes to fill.”