The passage of legislation recently introduced by U.S. Sen. Richard Shelby, R-Ala., gives credit unions and their national associations an opportunity to claim a long-awaited victory. However, before a victory lap can be taken, the bill must pass both the Senate and the House and be signed by the president.
One can speculate that the legislation has a good chance of passing both chambers of Congress since it contains a little something everybody wants. It appears to have been crafted to garner support of legislators from both parties representing various facets of the financial services industry. They may not like everything proposed, yet they will have to accept provisions in the bill they ordinarily would not vote for because they see an opportunity to achieve something for their constituencies. This unique bundling approach allows for more groups to join in taking that victory lap.
What are missing in the Shelby bill are the big-ticket credit union items. It seems like another year will pass without greater flexibility in member business lending (MBL) or the ability to raise supplemental capital. Those two issues are the ones that have been touted for years as the "must get" changes that would allow credit unions to better serve their members and continue to be viable.
It has been frustrating for credit union leaders to repeatedly get legislation introduced that would grant the sought-after authorities only to see the bills die a slow death and never get called for a full vote in either the House or Senate.
It is difficult for those credit unions across the country that would benefit from MBL or supplemental capital legislation to understand why Congress refuses to grant the requested changes. Every year their hopes are raised when told another effort will be made to get the job done, only to be disappointed when the efforts fail.
When you look at the past history of failures it is not difficult to understand why credit unions are not being given the substantive legislation they have sought. There are powerful interests in our nation's capital who believe credit unions have already been given too much and see anything additional as an unfair advantage to other financial providers. These powerful interests are known as the bank lobby.
It has been said that no one spends more on lobbyists, political contributions and other related efforts than the banking industry. Some Congressmen have publically stated that they believe banks have carte blanche when it comes to legislation or regulation. Others have privately said that if the banking industry is opposed to something, like the aforementioned credit union initiatives, it's not going to get done.
Credit unions will never be able to compete on the same level as bankers because they do not have the financial capability to do so. That is reality. It's a fact that will never change.
So should credit unions give up and throw in the towel? Absolutely not! They may be a small pebble in the banker's shoe, but we all know how much pain and aggravation a little rock can cause. And it is somewhat pleasurable to see them spend all that money and criticize credit unions while watching credit union membership continue to grow and be rated higher in customer satisfaction than banks.
If credit unions don't make the effort they will never achieve anything. Credit unions must continue to work for the legislation they feel they need and someday, just maybe, the financial gods will smile down upon them, and a major piece of legislation will be passed.
In the meantime, all credit unions need to support the Shelby bill and urge their lawmakers to vote for its passage.
It's not the full loaf of bread, but it's a pretty good slice.
Michael E. Fryzel is an attorney and consultant to the financial services industry with offices in Chicago. He is a former chairman of the National Credit Union Administration and board member. He can be contacted at: email@example.com.