While just a few years ago Bay State credit unions were the number-one target of banking industry groups, new competition from outside the industry has made banks and credit union groups acknowledge how much they have in common. The chief lobbyists from the state’s banking trade groups gave tips to members of the Massachusetts Credit Union League at the Omni Parker House in Boston last Wednesday before they departed to lobby their legislators on Beacon Hill.
The appearance was evidence of how much has changed in the rapidly evolving financial services industry. As the groups named privacy legislation a top priority, Massachusetts Bankers Association Executive Vice President Kevin F. Kiley recommended taking a common approach to lobbying legislators.
“I would encourage you to think about what we as an industry represent, because if the reliance is on one segment of the industry to solve all of our problems or kill all the bad bills, I think some of the negative things that potentially were targeted to banks could affect the credit union industry,” Kiley said. “I advise you to keep your eye on the ball.”
Federal banking regulators and the National Credit Union Administration have promulgated privacy regulations as a result of the financial modernization bill. In addition, bills filed in the Massachusetts General Court would implement tougher standards for the Bay State. A bill filed by the Cellucci administration would toughen laws for banks and outlaw identity theft. Another bill, H. 4994, filed by Sen. Steven Tolman, D-Brighton, and Rep. William Straus, D-Mattapoisett, would prohibit banks from sharing information about their customers unless the customers sign a form opting in. Federal regulations require banks to allow consumers to opt out of such information sharing.
If the opt-out provisions in some of the bills are adopted, the banks and credit unions that would be most hurt would be state-chartered institutions, Kiley said. Of the 300 credit unions in Massachusetts, 117 have state charters. At the end of last year the state’s 117 state-chartered credit unions had assets of $7.34 billion, comparable in size to the $8.6 billion in assets held by 76 state-chartered cooperative banks, according to the Massachusetts Division of Banks.
The state’s credit unions serve a total of 1.8 million consumers. More than one-third of the credit unions, 110, have assets of less than $5 million. A slightly larger number, about 130 credit unions, have assets between $5 million and $50 million. Only 60 have assets of more than $50 million.
Gov. Paul Cellucci issued a proclamation making April 5 Massachusetts Credit Union Day. The league took the occasion to launch an advertising campaign the same day that will include print, television and radio ads. The print ad promotes credit unions as an alternative to big bank mergers, providing personal services without the bureaucracy and high fees found at large banks.
‘Dozens of Issues’
To make sure their message is heard, executives must develop relationships with lawmakers and their staff members, said MCUL Senior Vice President Edward F. Saunders Jr. It is a good idea to add lawmakers to mailing lists for promotional material and newsletters and to invite lawmakers to call if they have a question about the industry.
“The more familiar they become with you, it will open up a channel of communication … and certainly will help the entire movement,” Saunders said. “At any given time there are dozens of issues before them on their desks. We aren’t the only ones going in on credit union issues. Kevin’s in there telling the other side.”
Dale Zelony, director of legislative services for the Community Bank League of New England, reiterated the need for the industries to work together on important legislation. Her biggest disappointment as a lobbyist came when the state legislature failed to pass a bill to ban surcharges in Massachusetts, she said.
“The bottom line was that the entire financial services industry wasn’t on the same page,” Zelony said. “The Community Bank League and Massachusetts Credit Union League agreed, but the majority of the Massachusetts Bankers Association did not.”
After the bill’s defeat, the groups worked together to create the SUM surcharge-free ATM network, administered by NYCE. The program has grown to more than 1,700 ATM machines.
“Working together we were able to come up with a free-market solution,” Zelony said.
The MBA has attacked the tax-free status of the not-for-profit credit unions through the years. In this legislative session, the association filed a bill to create a commission to study the taxation of financial institutions. MCUL members were briefed on industry opposition to that bill, H. 1288, before going to Beacon Hill.
“My greatest disappointment is to continue to get hammered on the credit union issue,” Kiley said.
Another item of legislation to receive attention from the credit union industry is H. 4149, which would prohibit state-chartered credit unions from selling insurance products in Massachusetts. League lobbyists described the bill as too broad because it would outlaw both the direct and indirect sales of insurance.
The MCUL also supports H. 21, which would simplify the process by which credit unions petition the Commissioner of Banks to have investments included on the state’s legal list of investments.
