Government Advocacy

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Provident Credit Union is a proud member of the California Credit Union League (CCUL). The League, with the help of California Credit Unions, lobbies in both Washington DC and Sacramento to advance our valuable movement. The greatest component of our collective success is the involvement of our members.

To become involved, click on the "Take Action" button for any of the "Current Issues" listed below. This will take you to the Connect for the Cause site, where you write to your legislators about the issue. With your help, we can further strengthen our ability to serve our members and communities.

Note: you can register and sign in with your "Connect for the Cause" user name and password in order to have that site remember who you and your legislators are each time you visit the site. This are NOT your Provident user name and password.

Current Issues

Stop the Data Breaches

Personal financial data security breaches are on the rise and affect all Californians! Recent breaches at Target, Michaels, Home Depot, and Neiman Marcus are impacting consumers. Merchants are not subject to the same federal data protection standards as financial institutions, such as your credit union. This means it’s easier for hackers to gain access to your credit card number, debit pin number, or other personal data through a merchant.

Since the beginning of the year there have been over 500 data security breaches exposing over 75 million data records. What makes the situation even worse is that the merchants pay NONE of the cost for their weak and ineffective security measures! Merchants aware that financial institutions, such credit unions, are responsible for all the losses associated with fraud. Further merchants know they are not required by law to alert the public when there is a data breach. Credit unions clean up the mess the merchants caused by informing members and reissuing or blocking credit and debit cards. If fraud does occur, credit unions work with their members to remove the fraudulent charges and help members keep their hard-earned money.

It’s time to tell Congress we need to stop the data breaches and bring the merchants up to the same data protection standards as credit unions.

Take Action

Credit Union Advocacy 101

January 2009

The credit union industry is diligent in regularly interacting with Congress to improve regulatory conditions. Provident Credit Union actively participates with national and state groups that assist in these legislative endeavors. Collectively, the movement also continuously educates legislators about the real value that credit unions offer the average American. From the very beginning, when Congress passed the Federal Credit Union Act in 1934, credit unions have been tax-exempt and recognized as not-for-profit financial cooperatives.

Not-for-profit

When the phrase “not-for-profit” crops up, it is sometimes labeled as a tax loophole. But credit unions truly do operate very differently from banks and other for-profit financial institutions:

  • Credit unions such as Provident do not offer stock options, sell stock, or pay quarterly profits to stockholders. Our only “stockholders” are our members. A credit union member's account holdings are what make them a shareholder.
  • If a credit union has extra funds after making loans from the funds that deposits provide, by law it can only invest them in short-term, safe, and conservative instruments, and are forbidden from making speculative investments for capital gain.
  • Unlike banks, credit union operations are overseen by an all-volunteer board of directors. They do not even benefit from stock profits, since all profits after expenses is given back to the credit union’s members (in the form of higher dividend yields, lower loan rates, and few or lower fees for services).
  • While banks can sell stock or otherwise recruit secondary capital, the only way a credit union can improve its net capital reserves is to retain earnings. Therefore, any money earned by a credit union is returned to the membership by adding to its capital.

Credit unions are tax-exempt because of our mandate to reinvest into our membership.

Taking our case to Congress

Originally, a credit union’s field of membership was generally based on a smaller community, corporation(s), or military base. But as communities grew, companies merged, and military bases closed, credit unions often extended their membership fields to include additional companies or geographical areas where their members lived. While this provided credit unions the opportunity to remain financially sound, their growth was seen as a threat by the bank industry.

When the banking industry took aggressive action and a lawsuit was filed by the American Bankers Association (ABA) in the mid-1990s, the credit union industry responded by taking its case to Congress. This launched the 1998 Federal Credit Union Membership Access Act, which updated the law to reflect current practices. And even though credit unions were never allowed to engage in speculative investments, bank lobbying resulted in this law also imposing tougher reserve limits for credit unions.

What are the banks really worried about?

In 2003, the assets of all credit unions combined, nationwide, totaled about $629 billion. The assets of all banks combined nationally totaled about $7.6 trillion. Credit unions only hold about 6 percent of the market share while banks hold about 94 percent. From 2002 through 2006, two new credit unions were opened in California. In the same time period, 80 new banks were opened in California (source: California Department of Financial Institutions). Additionally in California, the average credit union is about $300 million in assets, but the median is under $35 million in assets.

Help us to help you!

Because credit unions are owned by their members, it is very important that local congressional representatives hear from you, our member/owners! If you are interested in helping your credit union movement, go to the Connect for the Cause Web site and follow the easy steps to take action. It will identify your congressional representatives, and provides some pre-written letters to your representative to use as is or as a guideline to composing your own. This is a highly effective way to exercise your influence at the state and federal level, and oppose the efforts of the bank industry's paid lobbyists.

Thank you for your time and interest. Together, we can make a difference.

 

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