Editor’s Note: 2017 marks the 20-year anniversary of a two-year battle in Congress to get the Credit Union Membership Act not just introduced, but passed. It was a historic fight that led to a historic change for America’s credit unions, which were deeply threatened by banker lawsuits and court decisions that had gone against FCUs and how NCUA had interpreted field of membership rules.
To mark the 20th anniversary, CUToday.info has launched a series of stories in which those close to that fight share their recollections of the time and their insights into how it changed credit unions.
By Ray Birch
ST. PETERSBURG, Fla.—PSCU President and CEO Chuck Fagan recalls right where he was in 1998 when the Credit Union Membership Access Act was passed by the Senate, and how he got the news.
“I didn’t get the news from email, like we all do today,” said Fagan, who in 1998 had recently moved over to PSCU as SVP of the eastern region. In 1997 he had left the then $600-million Virginia CU, where he was VP of card services.
When the historical news came down, Fagan was sitting in one of PSCU’s locations in Virginia.
“I was in our Herndon office on a conference call when all this came out—this was before we were active users of email,” he recalled. “Our email system was confined to the regional office. We weren’t even connected to corporate. Dave Serlo, our president, had just found out and announced the bill’s passage during the call.”
Fagan said he immediately had a strong sense of what had just occurred—the magnitude of what the law would mean to the growth of credit unions.
Unbelievable Accomplishment
“It was unbelievable what had just been accomplished. I guess that is what I really thought,” said Fagan. “This was going to have a sweeping effect, across all credit unions, and it was accomplished with a grassroots effort. Amazing.”
Fagan—who left PSCU to head CUES in 2013, and then returned to PSCU in 2015—said he knew what lay ahead for credit unions from the decision.
“This was just a great opportunity,” he said. “Credit unions had stayed loyal to their origin, serving employer groups. But corporate America was on the move, and sponsors were leaving geographies and many credit unions were being left without much ability to grow.”
The signing of Credit Union Membership Access Act into law by President Bill Clinton gave all credit unions a boost by allowing them to continue to serve, or expand to serve, multiple groups.
“That gave credit unions an easy short-term path to the market, and then a broader path to expand into communities,” Fagan recalled.
Chuck Fagan
In the years that followed the late 1998 enactment of the Act, credit unions lined up to send in applications to NCUA to expand charters and Fagan said PSCU partnered with many, helping them to grow.
Act, PSCU Helped CUs Expand
“It is one thing to apply and get approval. But then you have to go into the community and try to grow,” said Fagan about what was a new step for many. “PSCU tried to play a role in helping credit unions expand.”
Fagan said expanding via new credit card applicants was an avenue through which the CUSO could provide a great deal of assistance.
“Even today, credit union credit card penetration with members is low,” said Fagan. “And even back in the late ’90s the big card issuers were marketing broadly to consumers. We developed programs that allowed credit unions to reach out to their communities with attractive card offerings.”
Before the Credit Union Membership Access Act passed the Senate in the summer of 1998, Fagan recalled how PSCU played a role in seeing that the bill would be signed into law.
“PSCU supported NAFCU and CUNA in their efforts,” remembered Fagan. “Back then PSCU had eastern, western, midwest and southern regions. In each of those geographies our teams were doing whatever they could at the local level to support this effort—one that was monumental and has had such a big impact on credit unions.”