On March 10-14, the Credit Union National Association (CUNA) hosted its annual Governmental Affairs Conference in Washington, DC. Sorry you missed it? We’re happy to provide a review of the highlights.
Jim Nussle, the president and CEO of CUNA, opened the conference by walking through the hall with his wife Karen asking conference attendees “What do you want Americans to know about credit unions?”
While talking about the “heart of a credit union” is surely a touching sentiment, most of the responses to this question left us confused. If large, nonprofit credit unions weren’t motivated by profits and growth and were truly passionate about reaching underserved communities tied with a common bond, the press would not be regularly reporting stories about million dollar executives, predatory lending, misuse of funds for growth and mission creep issues on the reg. If they were “trusted financial services,” maybe the press wouldn’t be reporting on the CEO of a major credit union’s $9.8 million embezzlement charge, or PenFed’s complete lack of anti-money laundering programs.
Some of the responses also suggested that credit unions are open and accessible to everyone, no matter a person’s financial status. And while credit union leadership plays this off as an effort to ensure “diversity and inclusion,” what this really means is “include as many wealthy members as possible” by stretching field of membership restrictions to further increase profits. Although all of these conference sound bites are heartwarming talking points, they are not exemplified in much of the industry’s day-to-day behavior — and as we all know, actions speak louder than words.
Nussle recapped the credit union industry’s successes in 2018, citing that in the last year alone the industry “added 5 million new memberships across the country” making credit union growth “five times faster than the population growth of the country.” He even pointed out that “this isn’t a natural growth” (thank you Captain Obvious). Per the Federal Credit Union Act, credit unions were established to help support people of modest means united by a common bond. And as much as the industry likes to tout its growth stats while also claiming to be mom-and-pop shops, there simply can’t be a real common bond between 5 million people – demonstrating once again that large credit unions have intentionally superseded their original purpose in order to grow their bottom lines.
Nussle took great pride in describing the industry’s “offense” and “advocacy for regulatory relief.” Nussle even commended the crowd for the $7 million raised for the Credit Union Legislative Action PAC in order to support friends of the credit union industry in the 2018 elections (but fails to explain that these extra PAC dollars are taxpayer subsidized thanks to the industry’s federal income tax exemption). Isn’t this money that could be used to really benefit members?
In one of our favorite moments, Nussle yelled “Just stop!” at CFPB when he raised the issue of further regulations on the industry – regulations that might better protect consumers from the consequences of risky business decisions by large credit unions (see: the effects of taxi medallion loans). Safe to say large credit unions not only put profits before members, but also before the taxpayers who are subsidizing them in general.
In yet another move to whitewash the serious issues the industry is facing, Nussle introduced the $32 million “Open Your Eyes” coordinated media campaign that aims to “elevate the credit union brand.” Yes, for the low, low price of $32 million (which again, could be used to help support local communities instead), this campaign, in addition to sponsoring professional sports teams, stadiums, concert venues and conventions centers, is the type of marketing strategy employed by Fortune 500 companies, not nonprofits.
In an effort to keep his troops together and add a new word to the dictionary, Nussle then railed against the harmful effects of “coopetition” (or competition between credit unions) on the industry. Maybe if industry regulators hadn’t created an environment where 75 percent of the tax benefit is going to just 5 percent of the industry (AKA the largest credit unions) in the first place, smaller credit unions wouldn’t feel the need to compete to stay afloat so that they aren’t swallowed by their larger brethren in mergers and acquisitions.
Finally, to round out the conference, CUNA gave itself a standing ovation with a press release praising its own lobbying efforts to ensure credit unions remain exempt from Sen. Warren’s (D-MA) Community Reinvestment Act (CRA) requirements. In other words, the association celebrated credit unions not having to serve people of modest means. Great job, guys.