More to conversions than first appears

Mike Welch's column, "Loss of Fed charters finally getting attention" in the March 29 issue of Credit Union Times riveted my attention. I have some comments I'd like to make in response. First, a switch of 146 charters from fed to state during a three year period does not a "flight" make. Welch didn't use the term "flight," but I have seen other commentators use it, and it has been used in headlines in Credit Union Times. Look at the numbers. As of June 1999 there were 11,062 credit unions nationwide. One hundred forty-six divided by 11,062 is 1.3%. This is over three years, so the annual average "flight" is a little over 0.4%. I'm thinking of Mad Magazine hero Alfred E. Neuman who has been immortalized for saying, "What, me worry?" Second, state charters were 39.4% of all credit union charters as of June 1999. State charters had 41.9% of total credit union industry asset dollars. The $1.5 billion in Fed assets lost that Welch quotes, if added to the state assets (realizing some was already included in the June 1999 figures), would increase this ratio to 42.3%. A whopping increase of 0.4% (if I did my math right). "What, me worry?" Number three: I agree wholeheartedly with Welch's analysis of the speculation for the charter conversions. I specifically agree with his assertion that the members don't care about charter. However, I disagree with his statement that the members "notice...good rates, good service, convenience, new products and services, etc." Many of these things have little to do with the type of charter, but a lot to do with good management. And state chartered credit unions don't have the lock and key on good management (can you believe a states' right and NASCUS guy actually said that?) Number four, given the foregoing, I say CUNA, NAFCU, and NCUA are wasting resources sweating out the conversion issue. I give it the five year test: In five years will it really make any difference? We're going through a shake out period - for all the speculated reasons. Again Mr. Neuman would say with that moronic smile, "What, me worry?" Number five: The bigger related issue in my mind is what's going on over at the OCC (Office of Comptroller of the Currency.) Comptroller Jerry Hawke is pounding the Capitol Hill pavement trying to get Congress to assess an examination fee on state chartered banks. The OCC is apparently feeling the budgetary pinch, and is trying to equalize the disparity between federal and state examination fees. This is nothing really new; the Clinton administration has had this in their budget for several years. What's different this time is the Comptroller is personally lobbying for the fee. And if that weren't enough, he and his general counsel are touring the country pitching state charters to convert, and smoozing fed charters to keep them from converting. Now, I say this could set a bad precedent. What if the NCUA Chairman in his swan song sings the same tune? Or a future NCUA Chairman takes up OCC's theme? Yeah, I've heard the "couldn't happen in credit union land" chant (because of NCUA being regulator and insurer, and the presence of the irksome overhead transfer rate.) But I don't think credit union leaders should overlook the OCC initiative. I'm balancing a lightweight issue (federal credit union conversions) in one hand, and in the other is the weightier issue of pro-active federal initiatives into the chartering area. Yeah, me worry. George Latham Deputy Commissioner of Credit Unions Virginia Bureau of Financial Institutions