Credit Union National Association and Affiliates (CUNA)

ESTABLISHED: 1934
EMPLOYEES: 364
MEMBERS: 11,800
PAC: The Credit Union Campaign for Consumer Choice

Contact Information:
ADDRESS: PO Box 431 Madison, WI 53701–0431
TOLL FREE: (800) 356-9655
FAX: (608) 231-4263
URL: http://www.cuna.org
PRESIDENT: Daniel Mica
CHAIRMAN: Nancy L. Pierce

WHAT IS ITS MISSION?

The Credit Union National Association (CUNA)'s mission is to provide the credit union industry and its members with the services and representation they need to ensure the continuation of the fair-minded, democratic traditions that are at the very core of the industry's philosophy.

HOW IS IT STRUCTURED?

From bases in both Madison, Wisconsin, and Washington, D.C., CUNA is directed by a 24-member board of industry volunteers. The board members are elected by member credit unions from within their geographical region and asset/membership range. State credit union leagues from each region also elect a representative to the board.

As a result of a Renewal Program introduced in the fall of 1996, individual credit unions are no longer represented in CUNA by their state leagues but now belong to both CUNA and their state leagues, enabling them to vote directly for CUNA board members, vote on all matters relating to CUNA's bylaws and dues, and provide direct input on regulatory and legislative issues.

PRIMARY FUNCTIONS

CUNA is a major national trade association serving U.S. credit unions. In partnership with state credit union leagues, CUNA provides a wide variety of services to credit unions. These include legal and governmental representation, which may involve testifying in courts or before Congress regarding issues related to credit unions. For instance, several times in 1998 and 1999, members of CUNA's Y2K subcommittee reported to Congress on the state of credit union readiness for 2000. CUNA also files amicus curiae (friend of the court) briefs on behalf of credit unions that have become ensnared in legal battles.

CUNA provides information resources to both its members and to the general public. For instance, the organization produces Buyer's Guide, an electronic directory that lists various vendors that credit unions may use. CUNA also publicizes the possible advantages of banking with a credit union instead of a bank.

PROGRAMS

CUNA's programs mainly revolve around internally oriented activities formulated to help its member unions develop and thrive in the marketplace. CUNA offers several educational and support programs designed to help individual credit unions offer new services to strengthen their competitive positions. For instance, the organization runs IRA Supertrain, a program designed to help credit unions understand and further their ability to work with individual retirement accounts (IRAs). Classes for both those just beginning to learn about IRAs and those who are more experienced are offered. These classes give employees a better understanding of their customers' needs enabling them to serve their customers in the same way a bank might.

Through its Center for Professional Development, CUNA offers training to credit union professionals in a variety of subject areas. One such program is the Certified Credit Union Executive (CCUE) program. For those credit union employees interested in pursuing a leadership role, CCUE offers opportunities to learn more about what skills are needed for promotion and to earn certification towards management positions.

The CUNA-run Credit Services Group (CSG) offers individual unions and state leagues a vast array of business tools and services to enhance their competitiveness and customer service. Telecommunications and data transmission services, publicity and marketing materials, forms and stationery, IRS reporting, and short-term investment products are just a few of the services offered by CSG.

BUDGET INFORMATION

Not made available.

HISTORY

The basic premise of the credit union system is the idea that people in a particular location or occupation pool their money and use this pool to make loans to each other based on the strength of their mutual interest, rather than for financial gain. Thus, those without a great deal of money for building a house or starting a business would be able to borrow from their credit union even if they did not have much collateral. This was quite different from banks that looked to make a profit on loans. The first credit union association was established in 1909 after a Massachusetts law was passed allowing its formation.

Initially credit unions were not successful. The 1920s was a period of booming economic growth in the United States and it was not very difficult to borrow money. However, with the onset of the Great Depression a decade later, credit unions with more lenient lending practices than banks were ideal for those who suffered great financial loss. The number of states that passed laws allowing credit unions skyrocketed, and by the mid-1930s there were almost 3,500 credit unions nationwide. It became apparent that there was a need for a national organization to represent credit unions' interests and in 1934, CUNA was established.

World War II (1939–45) was a difficult time for credit unions and growth slowed; however, with the end of the war the movement experienced renewed vigor. In just 20 years, the number of credit unions more than quadrupled to over 16,000 in 1955. This growth continued through the 1960s with the number of credit unions peaking at the end of the decade at more than 23,000.

The 1970s was a period of change for CUNA and its member unions. The number of credit unions declined as a result of smaller unions merging. Despite the smaller number of institutions, membership continued to boom, growing to more than 43 million during this time. Important changes were made in the way that credit unions operated as new services, such as mortgage lending, were added to make them even more competitive with banks.

Increased flexibility coupled with financial failure for some credit unions characterized the 1980s. CUNA helped its member unions expand their membership by relaxing the prerequisites for admission to a credit union. In the mid–to late–1990s, CUNA and all credit unions came under legal and legislative attack. Banking institutions felt threatened by the strength of credit unions and accused the industry of using overly-loose terms for membership which violated the laws that had established them. CUNA was forced to revise its recommended policies for credit union membership. The organization underwent a change in its structure as well. When it was organized in 1934, CUNA was a federation of state leagues with individual credit unions enjoying affiliation with CUNA through their league. In 1996 CUNA conducted a movement-wide study, the Renewal Project, and changed its bylaws to make credit unions members of both CUNA and their state league. The change meant that individual credit unions could participate directly in the election of 18 of the 24 CUNA board members and vote on bylaws and dues.

CURRENT POLITICAL ISSUES

CUNA focuses on a number of political issues, all of which involve the effect of particular pieces of legislation on its member credit unions. Issues include reducing auxiliary fees levied on credit unions, preventing banking fraud through legislation, and guarding credit unions against stifling lending rules. However, by far the biggest issue that CUNA confronted in the 1990s is the assertion by the American Bankers Association (ABA) and other members of the banking industry that the National Credit Union Administration and credit unions' membership policies violated the law.

Case Study: Credit Unions v. the Banking Industry

In 1982 the National Credit Union Administration (NCUA), the federal agency which regulates credit unions, decided to recommend that membership rules be relaxed, based on new interpretations of the laws governing credit unions. Previously credit unions could only sign up members who were employed by a particular company; however, the NCUA changed the rules so that credit unions could accept members from unrelated groups of employees of different companies. By becoming less exclusive, credit unions using the new guidelines allowed their membership to grow. CUNA supported these new rules.

In 1991, after incredible growth in credit union membership, the ABA and other members of the banking industry filed suit against the NCUA, arguing that those credit unions who chose to incorporate under federal law rather than state law should be subject to what it claims were the more restrictive regulations on occupation-based credit union membership. Those credit unions formed to serve the members of a particular occupation or trade must stick to those guidelines, argued the ABA. The ABA claimed that such unions should not be able to extend their services to other groups and form multiple-group unions, and it disputed the NCUA's right to recognize such groupings.

The ABA insisted that its advocacy of the narrow- or single-group interpretation would have very little impact on the credit union industry. CUNA counter-claimed that more than half of all credit unions with federal charters were of the multiple-group kind, most of these occupationally based, and that a judgment in favor of the banking industry would effectively rob the public of the right to choose the financial institution they preferred. CUNA pointed out that many of the states modeled their own incorporation procedures on the federal model, so failure of multi-group recognition at the federal level would inevitably result in the demise of the multi-group state-chartered credit union as well.

CUNA felt as though this was an attempt by traditional banks to destroy their competition, rather than an honest attempt at preventing illegal behavior. CUNA's president and CEO Daniel Mica's remarked in a letter to Donald Ogilvie, Executive Vice President of the ABA: "the ABA has often been a champion of deregulation, freer markets, and more unfettered competition in the financial services industry . . . For the banking industry to embark on a campaign to destroy credit unions through the imposition of stifling layers of court decisions, regulations, and legislation at all levels of government is a departure from what we thought were the first principles of most bankers. Or is it only when reduced regulation serves bankers' interests that bankers favor consumer choice?"

"Consumer choice" has become the catch-phrase for the CUNA campaign against the ABA. Despite support from President Bill Clinton's administration, an injunction was granted on October 26, 1996, forbidding federally chartered credit unions from accepting new members from companies or organizations outside their "core" employee groups. In its 1998 decision of National Credit Union Administration v. First National Bank & Trust Co. the Supreme Court ruled 5 to 4 that the NCUA did not have the authority to allow federal credit unions to serve more than one membership group. CUNA was forced to shift its attention from interpreting the law to changing or superseding the law.

Joining forces with the National Association of Federal Credit Unions (NAFCU), CUNA established the Credit Union Campaign for Consumer Choice (CUCCC), a national campaign to coordinate lobbying of both local and national legislators in support of new legislation that would allow the continuation of the broad-membership credit union system that had existed since 1982. The Credit Union Membership Access Act (H.R. 1151) was the legislation that realized the CUCCC's goal. This law, signed by President Clinton on August 7, 1998, enabled NCUA to reinstate its broader membership rules, which in turn enabled CUNA to count on the membership that it had accumulated through the multiple-group employee method.

FUTURE DIRECTIONS

With the success of the Credit Union Membership Act, CUNA recognizes that it must reevaluate its policies and priorities. In early 1999 CUNA called for a forum of the participants in the Credit Union Campaign for Consumer Choice so that the ramifications of the membership act can be discussed and acted upon. CUNA hopes to be able to preserve the new law against attack by the banking industry as well as develop grassroots strategies to ensure success.

GROUP RESOURCES

CUNA maintains an extensive Web site at http://www.cuna.org that contains basic information on the organization, member services, and CUNA policies. For further information about CUNA, write to the Credit Union National Association, PO Box 431, Madison, WI 53701 or call 1-800-356-9655.

GROUP PUBLICATIONS

CUNA has a variety of publications aimed at helping to improve credit union services and to educate members and prospective members. Credit Union Magazine is a monthly publication that keeps credit unions abreast of the latest news in the industry. Home and Family Finance is a quarterly newsletter aimed at members and covers such topics as credit union services and money management. Many of CUNA's publications can be downloaded at http://www.cuna.org/data/cu/pubs/pubs.html. For more information about CUNA publications, call CUNA Customer Service at 1-800-356-8010 or write to the Credit Union National Association, PO Box 431, Madison, WI 53701.

BIBLIOGRAPHY

Asseo, Laurie. "Credit Union Expansion Gets Cool Reception From Court." Rocky Mountain News, 7 October 1997.

"Bankers File New Suit Against N.C.U.A. in Credit Union Fight." Business Wire, 10 May 1997.

Blake, Peter. "Colorado Credit Unions Take It To The Banks." Rocky Mountain News, 30 April 1997.

"Credit Unions Need Help." Rocky Mountain News, 5 May 1997.

DePass, Dee. "Case May Put Credit Unions on the Ropes." Star Tribune, 13 November 1997.

Fouts, Dean. "Cornered Credit Unions Come Out Fighting." Business Week, 16 March 1998.

Maynard, Micheline. "Customers, Employees Love Credit Union." USA Today, 21 July 1995.

Meredith, Robyn."Checking In On Credit Unions." USA Today, 21 July 1995.