By Frank J. Diekmann
The announcement had come as a big surprise. Everyone knew President Clinton was going to sign the bill, but no one knew when, only that it would be several weeks away at some future point. But now the White House was saying Clinton planned to put his signature on the Credit Union Membership Access Act in an Oval Office ceremony in just a few days, and suddenly everyone in the credit union community was scrambling, including those wanting to make the list for one of the coveted slots for the ceremony.
It all had come so fast after what had been a unprecedented two years of victories and fears and arguments and nervousness and excitement and wins and losses for America’s credit unions, which had in the process learned a painful lesson that in Washington, wearing a white hat doesn’t really get you that much and it certainly doesn’t mean a bad guy won’t try to shoot you.
This was especially true at a time when credit unions weren’t just outgunned—they didn’t have any guns or really understand why they needed them. In 1999, the nation’s banking industry had about $4.5 trillion in total assets, compared to credit unions’ $348 billion. How could the elephant ever fear the mouse?
It was among many lessons that have changed credit unions, for better and sometimes worse.
Just the Fax
With the White House announcement in early August of 1998 I raced to send a fax—a fax!–to the White House press office requesting credentials to cover the signing ceremony. And several days later, there we all were, members of the press facing a small group of supporters inside the Oval Office: congressmen (especially Paul Kanjorski and Steven LaTourette) who had helped wrestle and prod what was better known as HR 1151 through Congress toward what had been a landslide vote (after getting out of a committee by just a single vote) for the Little Credit Unions That Could; leaders of the credit union trade associations and the shotgun marriage known as the Campaign for Consumer Choice; members of the NCUA board. Big smiles on every face. Photos taken. Commemorative pens handed around. Congratulations and handshakes and more.
And then Clinton a bit later during a ceremony in the Rose Garden that was being held for something wholly unrelated to credit unions departed from his remarks to talk about the Credit Union Membership Access Act and what it meant for the country, before going back to his script.
I listened for a while in the Rose Garden, and then returned to the White House Press Room where I hammed it up in a photo on the podium where the president’s press secretary typically takes questions and walked around America’s House a bit more. Finally, in another sign of how things have changed and after no one ever asked me why I was there, I and another reporter let ourselves out of the White House.
On Aug. 7 and the days that followed champagne bottles were uncorked from one Portland to the other, but what few remember is that the joy was matched just as much by relief. There had been very real worries that without an update to the 64-year-old FCU Act, credit unions would stagnate and die just as sure as had FDR. American commerce was constantly evolving, but credit union regs had not. Many of the companies—indeed entire industries—that had once chartered CUs to serve their workers were shrinking and even disappearing. Even CUs that had stable memberships, such as government employees or teachers, could only grow so far, and as those workforces aged their credit unions were slowing down with them. It had become more like common bondage for many.
We all know the old observation about hindsight, and as people prepared to party like it was 1999 few had any inkling of how the Credit Union World was going to change or how in some ways everyone had enrolled in Be Careful What You Ask For 101. You cannot overstate that the credit union community no doubt owes its survival to HR 1151, but the same can’t be said for many individual credit unions.
More than half of all credit union charters have gone on to that great Cooperative in the Sky since that day. The usual PowerPoint bullets are thrown up on the screen for the reasons so many met their demise–regulations, cost of technology, disappearing sponsor companies–but what I don’t think many have ever realized just how many boards of directors were completely unprepared for the new world to come when CUs needed to be run like real businesses. While ole’ Charlie and Stan may have been good guys who had retired after long careers at the mill and were now generously volunteering their time at the credit union, they just weren’t ready for the new marketplace of the new century—including how aggressive some other CUs were about to become.
For the past two years CUToday.info has been paying tribute to 1997 and 1998 as the “Two Years That Changed Everything,” for the credit union community. The same phrase can be applied to Feb. 25, 1998, the day the Supreme Court ruled against CUs, which you can read more about here.
A Different World
If you’re new to credit unions, welcome. And if you’re semi-new and weren’t around in 1997 and 1998, you likely have little idea how different the CU world is today. In those days credit unions were smaller and more “clubby,” if you will. You could look at someone’s name tag and immediately see where they were from and who they served, as Location/FOM was the primary “branding” for the first three-quarters of a century for CUs. Today, if you read someone’s nametag at a credit union event you don’t know where they’re from or if they’re even with a credit union—a lot of CU names now sound like a mutual fund or cold medicine, and it’s likely you have an FOM “overlap” with their CU. In 1998, “overlap” was mostly a byproduct of too many trips to the league annual meeting buffet.
Speaking of name tags, before you’re even handed one at a CU meeting today someone will start talking about advocacy. But today’s advocacy, while heartfelt, doesn’t match the passion seen in 1997 and 1998. As I wrote in this space earlier, “What had happened…was the Supreme Court of the United States knocked some of the arrogance out of credit unions. Credit unions just knew they were the righteous apostles of cooperative finance. Credit unions just knew bankers were the wrongteus ones. And credit unions just knew they Supreme Court would give its blessing to all that when it ruled from on high. And then, credit unions suddenly discovered what they didn’t know.”
But what they didn’t know they made up for with fervor and intensity.
Then and Now
In the early 1990s, CUNA was a Madison, Wis. trade group that also had a Washington office. Today, the grade group is a slick Washington lobbying machine (Oh, and there’s a Madison office). Up until the mid-1990s, CUNA CEOs were guys who had come up through the “system.” Today, two of the three CUNA CEOs to hold that job since the mid-1990s have been/are former congressmen. In the early 1990s, the only Top 10 PAC lists credit unions were on in Washington was for being “nice.” Today, credit unions regularly appear atop the money lists (although it’s sad so much time and effort and money has to go into defending doing the right thing).
And that’s 100% all due to a lawsuit filed by that little bank in North Carolina–that you can read more about here–and all the hard lessons that followed.
Some have occasionally referred to 1997 and 1998 as a low point for credit unions. They’re wrong. I think they were two of the best years in American CU history. There was a great awakening to what a world without CUs would mean, and that included lost livelihoods. CU folks flew, car-pooled, and chartered train cars to rally in Washington, with thousands in attendance in homemade T-shirts and hand-drawn signs.
Tables were set up with petitions to sign in lobbies asking local representatives to get onboard with HR 1151 (credit unions themselves added, “or else!”). One CU collected signatures at a zoo, and more than one “suggested” to members that if the bankers had their way the CU would have no choice but to close up shop and all loans would be due immediately. Think that might have motivated some members to get involved?
Big Dollars Vs. Pennies
There were as many creative marketing messages created by credit unions as there were markets to reach.
At many CUs you didn’t escape the drive-through without hearing why you needed to write a letter to your congressman. Let the bankers have their expensive TV campaigns and K Street lobbyists. Credit unions and their members put pens to paper (younger readers can Google that). One congressman in North Carolina reported receiving so many letters through the mail slot he couldn’t push his front door open. Arkansas’ CUs and their members sent not just letters to their reps, but also included pennies (to share their “two cents”). Big dollars may grease things on Capitol Hill, but it was all those pennies that were in reps’ thoughts. And on and on credit unions went with little budgets and huge passions.
In many ways, those really were the two years that changed everything for CUs. But what mustn’t change, what can’t be forgotten, is an understanding of why there was a first credit union chartered in 1909, why the Federal Credit Union Act was enacted in 1934, or why the Credit Union Membership Access Act overcame such huge obstacles to become law in 1998–there has always been and remains a great, fundamental need for the work credit unions do for their members and really, for all Americans.
And if you don’t agree, you’re welcome to send me a fax.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.infoor @FrankCUToday.