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“You’re gonna need a bigger boat!” This movie quote was made famous by the fictional character Chief Martin Brody (Roy Scheider) in the 1975 movie, “Jaws.” After seeing that the man-eating shark they are hunting is much larger than originally expected, Chief Brody unemotionally delivers this famous quote to the professional shark hunter “Quint” (Robert Shaw). It is also the first time the movie audience sees the enormous shark, which makes the quote’s delivery more effective. The quote has become a popular expression for situations where conditions are more challenging than initially thought, or assumed. However, this was over one enormous shark (or issue). Similarly, the credit union industry finds itself navigating waters filled with threats that are larger and more complex than ever before. I see several big issues facing our industry, such as defending the industry’s tax exemption, opposing the expansion of the Community Reinvestment Act (CRA) on federally chartered credit unions, and the growing consensus in passing the so-called “Credit Card Competition Act” to name a few.
With these pressing issues in mind, the industry must prepare itself to respond decisively. The Growing Menace For decades credit unions have faced perennial attacks from banks, merchants, and politically motivated actors. Historically, we have countered these efforts through bipartisan relationships and steadfast advocacy. However, the environment is changing, and the challenges are growing—amplified by negative press, missed technological opportunities, shifting political dynamics, and complacency in our assumptions that what worked in the past will go on forever (or at least until the current industry advocates retire). Negative Press Over the last year, our industry has endured increased public and Congressional scrutiny in reaction to negative articles and news videos that allege violations of fair lending and/or consumer protection laws. These reports unfairly portray credit unions as no better than profit-seeking banks. There are many effective counterarguments that can and should be made in defense of our industry. All it would take is the courage to speak out. So, did anyone notice a collective industry response? Sure, there were a few membership-based organizations who did speak up (e.g., DCUC and a couple of leagues); and as expected, we were both praised and criticized for it. Sadly, the preferred strategy voiced by other industry leaders is to “duck and cover” in the hopes this negative press will all go away. This strategy is misguided. In fact, this negative press continues to show up in Congressional hearings and public statements by legislators, regulators, and now consumer protection groups. Negative narratives about credit unions are not going away. They are influencing lawmakers and regulators while undermining the public’s trust. The solution is not to defend indefensible actions but to proactively demonstrate how the vast majority of credit unions deliver on their mission of serving members. Courage and collective action are needed now more than ever. Missing the Technology Wave The credit union industry has enjoyed decades of loyalty from consumers of all ages. As such, the industry has withstood change. For some, being slow to adopt technology is a deliberate strategy, and that is their choice. Yet, the trends are clear that choosing a traditional strategy is unwise in the long run. The increasing pace of technological adoption and people finding alternative sources for news and information have massively changed both the business and political cycle. Here is the concern: As consumers become more tech savvy, trends show they are less likely to join a credit union model that is mired in the past. If consumers are less likely to join an outdated credit union model, they are less likely to care about protecting the industry from the usual attacks. Compounding the challenge, there are more aggressive, non-bank fintechs that are taking aim against our industry. It is past time to acknowledge the change. The fact that only 20% of Gen Z have joined a credit union along with the fact that many will end up finding a better alternative is a clear signal that traditional strategies are past their prime. This is more than adopting the right technology platform. Marketing and telling our side of the story also needs to improve—now! Here is why: While the industry grapples with changes in consumer loyalty, there are many downstream effects these generational changes have in terms of political capital. Tech savvy consumers are voting in greater numbers. If we don’t offer a better product or service, even our ability to organize a formidable grassroots campaign becomes less meaningful when “the movement” represents a smaller portion of the population. This means our traditional support on Capitol Hill and in state legislatures is changing. However, there is another issue when it comes to politics. Our traditional allies are no longer in Congress, and those who remain have signaled a shift in their views and have questioned our commitment to serving people of modest means. We cannot afford to make poor political choices in this shifting environment. Shift in the Political Landscape Credit union advocacy, much like military and veteran issues, must remain apolitical. Serving people and serving our country is never a Republican or Democrat issue. They are an American issue and have always enjoyed support from both sides of the aisle. That said, it is never a good time to form or join in efforts to resist a particular party. There are other issues which fuel deeply passionate positions on both sides of the political divide. Credit union advocacy should never be one of them. Our industry loses credibility when we seek to identity as a Democrat or Republican-friendly industry. The political landscape changes all the time. Public statements against a political party, misleading legislators on industry consensus, making backroom deals, or guiding outsized political donations have sent the wrong signal. None of these actions ever go unnoticed, especially when the party that just won the White House—which has a majority in both houses of Congress, and benefits from a 6-3 majority on the Supreme Court—is reviewing the industry’s tax exemption and regulatory framework. Don’t expect any favors from the party that will be in the minority. Remember, there is all that negative press coupled with the industry’s inability to collectively counter the emerging narrative, which comes across as dismissive. Plus, recent comments by industry leaders during and after the House Financial Services Hearing last month did not help. There is genuine concern that our industry is losing support on both sides of the aisle. If this is news to you, you have not been paying attention or have not been adequately informed. Hiding this from you or dismissing this concern will not advance or save our cause. We need to rebuild bridges on both sides of the aisle. While some organizations (e.g., DCUC and a few leagues) have been actively engaged in repairing cracks in our Congressional coalition, there is more work to be done. We’re “gonna need a bigger boat.” Becoming Complacent Voicing these concerns with the shifting political landscape is nothing new. In fact, I know many credit union leaders have expressed the same concerns in multiple forums and in 1v1 discussions. Yet, it is disappointing to hear a few industry advocates, including a couple league presidents, who continue to dismiss these concerns while citing our traditional bipartisan support on Capitol Hill. The assumption is our political support remains fully intact. As a former military commander, war planner, and backed by a master’s degree in strategic studies, I can confidently say that making assumptions is the “kiss of death” in military operations. As a trade association president, it is equally catastrophic to make assumptions. Yet, assumptions are one concern—complacency is another. Yes, the industry currently enjoys a great deal of support from the public and Congress. Let’s not get complacent and take it for granted. Yet, some industry advocates continue to caution against drawing attention to “distant issues,” saying doing so is disruptive to our industry and weakens our new “unified” voice. I disagree. The problem facing our industry is these “distant issues” had their start about a year-and-a-half ago and have fully arrived on our doorstep—well ahead of the 119th Congress being sworn in. Apart from industry opponents, complacency serves those close to retirement and who will not have to grapple with these issues for much longer. Unfortunately for these advocates, the fight is now! We Need a Bigger Boat We cannot afford to be complacent; a sense of urgency is required. We need to think outside of the box when facing these questions: How much of our industry would survive if credit unions lost their tax-exempt status? How will new CRA-like regulations put many small and mid-size credit unions out of business? How can we speak truth to power if we don’t recognize and acknowledge there are many voices in the industry who can make a difference? Who has the same credibility and trust as our nation’s military? DCUC’s board of directors and I have been particularly encouraged by the calls from credit unions of all sizes and charter types to enhance and amplify our advocacy efforts. The message from them has been unmistakably clear: they want a stronger advocacy voice, defined by proactivity, realistic recognition of threats to the credit union system, and advocacy that puts a premium on effective use of credit union resources. In response, DCUC has created the Defending Credit Unions National Advocacy Fund. Here are its hallmarks:
As you contemplate your advocacy choices (i.e., dues invoices), please note you will not find a more effective advocate who guards its credibility on Capitol Hill and in the Executive Branch than the Defense Credit Union Council. We get results! The challenges facing the credit union industry are immense, but they are not insurmountable. By coming together, embracing innovation, and engaging in proactive advocacy, we can ensure the industry’s continued success. Now is the time to build a bigger boat—and face the big sharks head-on. Read the full article >>> Comments are closed.
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