What a busy summer in credit union land! We took a brief respite from our “Must Read” lists this summer to tend to other matters, but fear not! This post includes five articles for each month—June, July, and August—on important credit union topics you may have missed.

We hope these are helpful and, as always, please share additional articles by leaving a comment below!

June

Create a Board Succession Plan: Seven Steps

Creating a board succession plan is in members’ best interests and helps fulfill directors’ fiduciary duties. Learn how with this article.

What Do Credit Unions Need to Do to Remain Relevant

Several credit union IT leaders were asked this question by Credit Union Times at the recent Finovation conference in San Francisco: “What do credit unions need to do to stay relevant in the coming years?”

Small Banks, Credit Unions Fear Debit Fee Declines

Could a limit on the fees retailers pay on debit card purchases cause your bank or credit union to fail? That’s the dire picture some are painting as a cap on so-called swipe fees nears.

Louisiana League to Develop Young Professionals Network

The Louisiana Credit Union League (LCUL) is developing a program to provide networking, development and growth opportunities for Louisiana’s young credit union professionals.

Compliance: What to Know About Reg Z Changes

CompBlog, the Credit Union National Association’s (CUNA) newest addition to its electronic information toolshed for members, has started a conversation about what credit unions should focus on in the changes the Federal Reserve made this spring to its Regulation Z.

July

Why Social Media’s in the Cards

Credit unions still unsure whether or not to invest in social networking may find some direction in a new study. According to SYNERGISTICS Research, cardholders are beginning to connect with credit card issuers via social networks.

Credit Unions Provide Haven for Commercial Lending

More companies have turned to their friendly neighborhood credit union for commercial loans, which is keeping many folks in business and adding jobs to a shaky economy.

Fed Issues Interchange ‘Exempt/Not Exempt’ Lists

In its first step to facilitate a two-tiered debit card interchange fee structure since adoption of its final rule, the Federal Reserve Tuesday (06/12) issued two lists—one with the names of each institution considered to be covered by the new cap on debit interchange fees and another with the names of those that are exempt.

Check 21: Image is Everything

Even though the volume of checks written gradually declines each year, credit unions should continue to invest in check-capture technologies that automate item processing and lower costs, says Andrew Tilbury, director of marketing and communications at Bluepoint Solutions Inc.

Social Media Enters the Hiring Process

As with all communication, social media comes with business benefits and legal risks. A primary area for concern among HR professionals is the use of social media in the hiring process.

August

Crash Networkers Take on Affordable Home Ownership

In just ten weeks, the Filene Research Institute and the Crash Network have developed an innovative program designed to help credit unions increase the availability of affordable home ownership.

Ed Filene on Embracing Social Media

There has been a long-running topic on EverythingCU.com about how to get management on-board with social media when they are dead-set against it.

Can Square Bring You More Business?

Shari Storm, SVP and CMO for Verity Credit Union suggests the launch of Square may cause credit unions to see more of their members starting side businesses.

CU Members Today and Tomorrow

As credit unions look to attract new members and peak borrowers in the future, they should increasingly think “young” and “Hispanic.”

How Stock Market Woes May Impact CUs

What is the consumer-confidence effect of market volatility on credit union members?

Ryan Donovan

From Ryan Donovan:

Several months ago, a video of a man actively pondering the meaning of a double rainbow in Yosemite National Park became an Internet sensation.  “Double rainbow!  What does it mean?”  No one who saw that video will forget it anytime soon, and I couldn’t help but think about that video last week when, in the aftermath of Election Day, I was bombarded with the question, “What does a divided Congress mean for credit unions?”

The short answer is “not much.”  Here’s why:

1. Congress was already divided.  While the next Congress will be indisputably divided, a strong argument can be made that the current Congress (now in lame-duck form) is already divided, despite the fact that Democrats hold majorities in both chambers.  In an environment where 60 votes are necessary to pass legislation in the United States Senate, the Republican minority in the Senate has wielded significant power, tempering the Democratic-controlled House of Representatives.  In January, Republicans will control the House of Representatives and Democrats will have a majority (note the word choice) in the United States Senate.  Still, it will take 60 votes to pass anything in the Senate, and the group that can put 60 votes together on legislation will control the Senate.  A divided Congress returns to Washington; it is simply divided in a different way.

2. The legislative outlook is unchanged despite the election.  For credit unions, the legislative outlook in the next Congress is the same today as it was before the election.  Housing finance reform and the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act will be the top issues before the Financial Services Committee and the Senate Banking Committee.  Capital reform will be among the legislative initiatives credit unions pursue in the new Congress.  The outcome is dependent on the proponents putting together the votes to enact legislation.  And in today’s political environment getting anything done in the new Congress will require putting together 218+ votes in the House (including the Republican leadership) and assembling a coalition of 60 votes in the Senate.  It’s a high hurdle no matter who is in charge; and in a politically charged presidential cycle, it becomes even more difficult.

3. Credit unions have balanced support in Congress.  Credit unions have earned balanced support from Members of Congress on both sides of the aisle.  While we certainly have Democrats and Republicans in our midst, the credit union system is not Democratic leaning, like labor unions; and it is not Republican leaning, like the Chambers of Commerce.  When a wave, like the one we saw last week, hits our ship, it is our balance that keeps us from floundering.  While we are not aligned with either party, we do have a very vested interest in seeing credit union friendly candidates elected to office.  So, we were rightfully disappointed to see one of our champions lose reelection last week.  This particular loss cannot be taken lightly, but it is also not the end of the world.  Credit unions are fortunate to have many friends in Congress, including a number who will be sworn in for their first term in January.  In most cases, these candidates won election thanks to help from the credit unions in their district, including several credit unions that went to their members to encourage them to vote.  While we did not win each race in which credit unions actively participated, in every instance, the credit union effort helped to turn out the vote for the credit union friendly candidate.  We should embrace credit union members being politically active in supporting our issues because no one has a more vested interest in a credit union-friendly Congress than credit union members themselves. 

To credit unions, it should not necessarily matter whether Democrats control Congress, Republicans control Congress or if there is a divided Congress.  What matters is that there are plenty of credit union supporters in Congress – and plenty of voters ready to elect credit union friendly candidates.  Last week’s electoral wave did not crush the credit union vessel by any means, but over the next two years it is our responsibility to work to solidify and expand the base of support for credit unions in Congress.

Ryan Donovan is the Vice President of  Legislative Affairs at the Credit Union National Association.

Since we won’t have the late, great Tim Russert to guide us in reading the tea leaves on Election Night, here are three things to watch for as you try to guess whether donkeys or elephants will run the halls of Congress next year.

1. Whither goes New York and Pennsylvania? Four upstate New York districts (the 19th 20th, 23rd and 24th) and three Eastern Pennsylvania districts (the 8th, 10th and 11th) each feature Democratic incumbents in tight toss-up races.  GOP sweeps in these districts (especially in New York, where the Democratic Gubernatorial and Senatorial candidates should win easily) will give an early indication that it could be a long night for Democrats.

2. How closely do exit polls and turnout reports align with early balloting results? Recent reports have indicated a surge of early voting in key Democratic districts across the country, which seems contrary to the conventional wisdom of an “enthusiasm gap” between Republicans and Democrats.  If this late surge in blue precincts bears out on Election Day, could it help Democrats hold in swing districts?

3. Will the West Coast just keep us up late, or into the next day(s)? If control of the House and Senate is still up for grabs as polls on the West Coast close, it may be days before we know who controls each chamber.  Virtually every scenario for GOP takeover of the Senate includes must-wins in California (Fiorina over Boxer) and Washington State (Rossi over Murray). And there are six tight House races (CA-3, CA-11, CA-20, OR-5, WA-2, WA-9) in California, Oregon and Washington as well. The kicker: Oregon and Washington vote almost entirely by mail, and a ballot mailed and postmarked by Election Day must be counted.  So if any of these races are close…it could be days before we have results.

June has been consumed by the fight over debit interchange, but another key credit union priority: raising the statutory cap on member business loans, may soon be elevated as well.  They are two different issues, but do have something in common.  The credit union grassroots outpouring that has accompanied the interchange battle is also expected to have residual benefit in convincing Congress to enact an MBL bill.

The key developments that occurred when Credit Union National Association CEO Dan Mica testified on that issue in May before the House Financial Services Committee have added to the MBL issue’s momentum.  Chairman Barney Frank (D-Mass.) said then that he would hold a committee vote on MBLs relatively soon.  And another witness, Treasury counselor Gene Sperling, stated publicly the parameters (stemming from discussions with CUNA) under which the Administration would support raising the cap

Rep. Frank’s desire to move quickly to MBLs after dealing with financial reform is welcome and makes sense from a policy and economic standpoint.  The May U.S. employment figures were disappointing, generating talk of a jobless recovery.  Meanwhile the Senate is contemplating a jobs bill that could become a vehicle for MBLs in that body.  Why?  As CUNA, the leagues and CUs have emphasized repeatedly, raising the cap is a job-creating measure, generating loans that would lead to an estimated 108,000 jobs in just the first year.

Nor would the MBL plan come with any government cost. That sets it apart from the Administration’s plan to channel $30 billion leftover from the Troubled Asset Relief Program (TARP) to community banks as incentive to lend.  And, of course, beyond the job-creation and no-government-cost elements is another major policy imperative: small businesses are still in need of capital, and they’ve not been able to get it from the banks.  Federal Reserve Board Chairman Ben Bernanke flagged the problem in a speech this month, noting banks’ outstanding loans to small businesses fell in the first quarter of 2010 to $600 billion from $700 billion two years prior. He added that only 40 percent of small business that tried to borrow last year had all of their borrowing needs met.

Many credit unions can provide specific examples of small business borrowers turned away by banks, and the media has been paying attention.  A May 27 Wall Street Journal story (“Credit Unions Fight Cap Law”) spotlighted two such borrowers—a bagel shop owner in San Antonio, Texas and the owner of an inn and cultural center in Albuquerque, New Mexico.  Thanks to her loan from Randolph Brooks Federal Credit Union, the bagel shop owner just hired her 13^th employee, the Journal noted, adding that the credit union helped after the owner had been rejected by several banks.

Too often, the banks aren’t lending. Yet they are the ones seeking to block the MBL legislation.  If the issue heats up again soon as expected, CUNA, leagues and credit unions will need to block the banks.  That  is where the grassroots efforts that were ramped up on the interchange fight will have residual benefit, both going forward as grassroots are again called upon—and by calling back to mind what legislators saw in recent weeks.

“Members of Congress have good memories; so do their staffs,” says John Magill, CUNA senior vice president of legislative affairs.  “They’ll remember vividly the massive response on interchange, which will definitely have a spillover effect on MBLs.  There will be instant recall of something that happened so recently, and it will have a positive effect on our lobbying efforts.”

If credit union business lending has been the subject of stories and opinion pieces in your local newspaper – or even in the national papers you read or the local radio stations you listen to – it’s no accident.

It’s the result of a coordinated effort by the Leagues – working with CUNA – to get out the word through local media that credit unions are helping the economy, and want to do more. And pressing the point that they could do more if Congress would allow credit unions greater capacity to make member business loans.

Which would pump $10 billion into the economy and create 108,000 new jobs at no cost to the taxpayer.

News stories and op-eds have appeared from Maine to California. News stories typically feature local business owners singing the praises of their credit unions.

“Community Choice (Credit Union) has been a godsend for us,” Christy Drake told the Des Moines (Iowa) Business Record. Drake, with her husband, owns and operates two small businesses in Greater Des Moines; a bank had recently called their loan. “I never missed a payment, and I was never late; that was the shocker,” she said.

“We have had a very pleasant experience (dealing with the credit union) compared to the similar challenge facing traditional banks,” Mike Cahill told the Arizona Capitol Times. Cahill owns seven Phoenix-area car wash locations.

The Las Vegas Business Press wrote that local business owner Curtis Wells “is the kind of customer community bankers dream of, but he is committed to Boulder Dam Credit Union, which gave him his first loan and all the loans since.”

These items – and more – are on the CUNA website; click on Member Business Lending under CUNA Initiatives.

With the power Congress holds over our industry’s future, it is no wonder that credit unions across the country are paying close attention to this fall’s midterm elections, in which all 435 U.S. House seats and 36 U.S. Senate seats will be up for grabs. Indeed, the political junkies among us are salivating over the prospects of a close, contested election.  Here in Washington, the latest parlor game has become guessing how many seats Democrats will lose this fall.

Yet with 24-hour cable television, talk radio, newspapers and online news all focusing on the latest political rhetoric, it can be hard to cut through the clutter and figure out what really matters.  Just what can the astute observer look for in his attempt to predict the future?

So as a service to all the armchair Roves and Axelrods out there, this is the first in an occasional series of modest attempts at analyzing the trends and factors driving the political landscape this year.

For the first installment, a little American political history.  It turns out one of the biggest predictors of midterm election results hinges on the fate of a public official not even on the ballot: the President.

The President’s party almost always loses seats in midterm elections.  With just two exceptions in the House (1998 and 2002), and four in the Senate (1962, 1970, 1998, and 2002), this holds true for every midterm going back to Franklin Roosevelt’s second term in 1938.

Thus, the question is not whether Democrats lose seats this fall, but how many. And that’s where the President’s approval rating comes in.

When the President’s approval rating on election day is at or below 50%, the President’s party loses seats.  Only if the President’s approval is above 50% is there any hope for his party at all – and then only if it is way above 50%.

In fact, according to a recent analysis by Bill Schneider, distinguished senior fellow at the centrist think tank Third Way and senior political analyst at CNN, the average loss of seats in midterms going back to 1970 numbers 10 lost House seats and 1.5 lost Senate seats in years when the President’s approval rating is greater than 50%.  And when the President’s approval is below 50%? His party lost an average of 31 House seats and 4 Senate seats.

In fact the correlation is so strong, an approval rating in the 50s is not even enough to save the President’s party.  Presidents Nixon, Reagan and George H.W. Bush all lost seats even though their approval ratings were each north of 58%.Presidents Clinton and George W. Bush had to attain approval ratings of 66% and 63% respectively to break the trend and pick up seats for their parties (a mere five House seats for Clinton in 1998 and eight House seats for Bush in 2002). (source)

So those Democrats in Congress worried about their majorities would do well to pay attention to President Obama’s approval rating.  And just how is the President doing these days?  Pollster.com‘s average of major national polls taken in April shows the President at 47% approve, with 48% disapproving of his job performance.  Time will tell if the Democrats—and from their vantage point, the White House—can turn things around before November.