Minnesota bankers spend eventful day at state capitol

Northwestern Financial Review, Mar 15, 2002 by Dullum, Justin

[meeting coverage]

During the Minnesota Bankers Association's "Day at the Capitol," executives got a firsthand look at how unpredictable a day at the state capitol can be-something MBA's lobbyists know all too well.

Legislators popped in and out of the Feb. 19 event, few appearing at their scheduled times. A highly publicized state budget deal was being struck that day, and as hurried legislators stopped in to address the bankers, many broke news about legislative events as they happened-some of which were good for bankers. In particular, House leader Rep. Steve Sviggum told bankers that pending credit union legislation would likely be shelved.

In weeks prior to the meeting, Joe Witt, Margaret Vesel and Steve Johnson of MBA's government relations team, along with Government Relations Council Chairman Bob Weiss of Beacon Bank in Shorewood, had argued against the impending Minnesota Credit Union Protection Act.

The credit union bill would grant state chartered credit unions parity with federally chartered credit unions, as well as any out-of-state credit union with a branch in Minnesota. It would also permit credit unions to serve more people.

The MBA lobbyists said the credit union industry had presented emotionally-charged testimony. The banking industry's testimony was not warmly received. "Joe Witt should be wearing a football uniform, he got beat up so bad in hearings," Weiss said.

But apparently their message reached just enough of the right people. Addressing the group later in the afternoon, Sviggum said the credit union bill was headed to the tax committee. "You know what happens in the tax committee, right?" Sviggum asked rhetorically, stopping just short of announcing the bill will be held over and not be voted on this session.

The news was a small surprise victory for the MBA. But that victory might be fleeting, warned Mary Ellen Domeier, MBA president. "We will still need to keep a watchful eye on this and do what we can to make sure our voice is heard." Domeier is president of Valley Bank & Trust, New Ulm.

While Sviggum alluded to a stalled bill, the bill could resurface this session, not to mention next year. Various legislators addressing the group throughout the day gave conflicting predictions about the fate of the credit union bill.

Sen. Linda Scheid, a Democrat, said the bill would eventually go through. "We want to keep credit unions with state charters in the state." Rep. Greg Davids, a Republican, concurred, adding that many credit unions are switching to federal charters anyway, so giving state credit unions parity at least keeps them within the control of the state.

Sen. Roy Terwilliger, a Republican and a banker, told the group he opposed the bill, but believes the Republican caucus would not oppose it. He urged bankers to contact their legislators. "Hometown bankers do have a big impact on their legislators," he said. "Most understand your important roles in communities."

Sen. Dick Day, Senate minority

leader and John Wodele, Gov. Jesse Ventura's spokesperson, offered more positive news for bankers. Contradicting Terwilliger, Day said he believes his caucus might not pass a credit union bill. "I don't think we've ever gone against the bankers," Day said. Wodele made no promises, but said Gov. Ventura, known for his maverick approach, is open to the idea of taxing state chartered credit unions. "The governor is always open to ideas that fairly distribute taxes," said Wodele.

Johnson said the credit union battle is far from over. "The credit unions are out-spending banks three or four to one at the capitol," said Johnson. "They have a well-greased presentation."

Johnson said credit unions commonly use Gramm-Leach-Bliley in arguments, saying that credit unions got nothing out of that legislation and banks got everything-- including an enormous tax break via subchapter S eligibility. One banker at the meeting noted that Gramm-- Leach-Bliley has done nothing to help his bank, but rather created more paperwork, therefore making the credit union's argument ironic. When collectively asked by Johnson whether others at the meeting found Gramm-Leach-Bliley's impact negative, there was general agreement that they did.

While the credit union bill dominated the meeting, bankers also discussed predatory lending legislation. Witt said it's possible the legislature may pass a predatory lending bill that will not effect "99 percent of the loans community banks, typically make."

Domeier said bankers will have to play an active role if they want favorable legislation. "We need to do a better job of isolating the problem-- makers and letting it be known who they are."

By Justin Dullum