NAFCU, CUNA merger plans draw concerns about equal representation

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Jim Nussle (left), president and chief executive of CUNA, would lead the combined organization after Dan Berger (right) announced his plans to step down as president and CEO of NAFCU earlier this year.

While constituents of the National Association of Federally-Insured Credit Unions and the Credit Union National Association were generally supportive of the groups’ planned merger, some are concerned that the combined organization may start to favor its largest members. 

Under the deal announced by NAFCU and CUNA on Tuesday, the two advocacy groups would form a new entity named America’s Credit Unions and be led by CUNA’s president and chief executive Jim Nussle. Members of each group are expected to vote on the merger this month.

Over the years, there have been times when the two national trade groups disagreed on legislative and regulatory issues, and that’s always a challenge on Capitol Hill, said Paul Gentile, president and CEO of $2.1 billion-asset Merck Employees Federal Credit Union in Rahway, New Jersey.

Gentile, who was formerly president and CEO of the Cooperative Credit Union Association, said it is always best when the industry can speak with one voice.

“The key challenge will be to ensure all types and sizes of credit unions are effectively represented. … Obviously the big dues dollars come from the larger shops, but it’s vital that smaller and midsize credit unions are getting effective advocacy,” Gentile said.

Gentile underscored that the system’s strength is in the diversity of the credit unions — from smaller institutions that may have just one branch to large, multistate credit unions.

“We all play a unique role in the cooperative credit union system, so we all must have representation,” Gentile said. “Clearly there will be issues larger and smaller credit unions may not agree on and that’s where the nuanced approach to good advocacy must come into play.” 

Executives of regional credit union leagues say that joining the two groups would create a more unified voice for the credit union industry and strengthen advocacy against the issues that credit unions face.

Patty Corkery, president and CEO of the Michigan Credit Union League, explained that state and regional associations have always been in favor of a cohesive league system that combined the presence of a national entity with the perspectives of local institutions.

“We look forward to the opportunities for MCUL to engage, support and partner with the combined entity and are excited about the benefits America’s Credit Unions will bring to our Michigan credit union community,” Corkery said.

Increased collaboration between the leagues and the nationwide groups is a common thread connecting the feedback from many stakeholders, who say the change is necessary for keeping up with the progression of the industry.

“There will always be critics from those who are most closely tied to each group, but if they handle the implementation well and egos are set aside among the key players with both groups those criticisms should be short lived,” said Dennis Dollar, former chairman of the National Credit Union Administration and partner of Dollar Associates.

NAFCU and CUNA have considered a merger for years. The discussion began in earnest in 2008 when several credit unions signed on to a white paper advocating that the two groups combine; NAFCU’s board of directors voted unanimously against the suggestion at the time, and rejected a similar proposition a year later.

Over the years, both groups had factions that said “hell no we won’t go” to the idea of a merger, but many of those folks are now gone, said Geoff Bacino, a consultant and former NCUA board member.

“And I think as new blood has come in, people realized that there’s economies of scale that you gain,” he said. 

Credit unions also won’t have to pay two sets of dues or make a choice between membership in the two trades, Bacino said. Nor will they have to decide which certification school is better or which PAC to contribute to.

Bankers are less keen on the merger. Public policy experts with the Independent Community Bankers of America said the merger would embolden an industry that already enjoys a tax-exempt status helping fuel its purchases of smaller banks. 

Anne Balcer, senior executive vice president and chief of government relations and public policy for the ICBA, stressed the difficulty that community banks are facing trying to support communities in the same capacity as credit unions but with the added burden of taxes.

“While the nation’s community banks continue to work tirelessly to sustain local communities, credit unions are violating the limits established by Congress to justify their tax exemption. … ICBA continues to encourage policymakers to bolster protections for consumers and small businesses by addressing the outdated credit union tax exemption and lax oversight by the NCUA,” Balcer said. Other banking advocates such as the National Bankers Association, the Consumer Bankers Association and the American Bankers Association declined to comment.

Economists and other analysts will keep a close watch as the agreement unfolds to see how each voice is represented.

“There’s only a handful of credit unions who act like banks, so the proof will be in the pudding for how much these organizations prioritize policies that impact the very largest credit unions versus the vast majority of credit unions who are smaller,” said Aaron Klein, Miriam K. Carliner chair and senior fellow in economic studies at the Brookings Institution.

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