The dual chartering system today seems in fairly good balancejudging by the recent pattern of credit union conversions fromstate-to-federal and federal-to-state charter. While there willalways be some back and forth, the pattern has been relativelystable of late. Only 24 conversions took place in 2004 (four fromfederal to state; 20 from state to federal); 25 in 2003 (eight fromfederal to state; 17 from state to federal). This is in contrast tosome rather extreme pendulum swings we have seen in the past. In1997, for example, 65 federals converted to state charter and onlysix switched from state to federal. Such dramatic shifts in favorof one charter over another, when they occur, are of particularconcern to CUNA as the nation's largest credit union trade groupand the one representing state- and federally chartered creditunions. When it comes to the dual chartering system, the analogy welike to draw, coined by CUNA's Dual Chartering Task Force, is thatof a "race to the top." In other words, CUNA believes in seekingpositive advancements in state and federal charters, making eachcategory continually more attractive and better able to stay insync with the needs of credit union members. Credit unions andtheir members are better off when, consistent with safety andsoundness, they can choose between equally viable state and federalcredit union charter options and the inherent variations in powers,authorities, rules and regulations in order to find the set thatworks best for their circumstances. That is the essence of astrong, vibrant dual chartering system, one that CUNA will continueto work to protect and advance; hence, the "race to the top." Bycontrast, those who would seek to advance one charter at theexpense of another are following a recipe for imbalance,divisiveness and a plunge to the bottom. The goal of enhancing thecredit union charter, state and federal, is particularly timely inthe context of current controversies over conversions of anothertype-credit union to bank. It has been gratifying to see thepositive response we have received after the CUNA Board in Juneissued a set of new principles that will guide CUNA policy oncredit union-to-bank conversions. Many have commended theprinciples' emphasis on full and clear disclosures, opposition tounjust enrichment for insiders, and support of the idea thatconversion decisions should be driven by the members based on whatis in the best interest of the members. Our board felt taking afirm stance was in order as part of CUNA's responsibility to defendand advocate for the cooperative structure of the U.S. credit unionmovement, particularly in light of the way the banking industry hasseized on the conversion issue to promote its anti-credit unionagenda. "Friendly" appeals to credit union CEOs from the likes ofDiane Casey-Landry, CEO of America's Community Bankers, belie theindustry's true objective, recently articulated by Jeff Plagge,president and CEO of First Waverly Bank of Waverly, Iowa andco-chairman of the American Bankers Association's anti-credit unioncommittee. Their long-run objective, he said, "is to force creditunions that have aggressively expanded their territory, theirmemberships and their products and services to convert to a mutualbank." There you have the unvarnished truth: the banking industrywants forced conversions and the complete absence of choice. Theelements of CUNA's conversion principles in favor of fulldisclosure, members' rights, and against unjust insider enrichmenthave engendered the most discussion. Less so, but vitally importantin our estimation, are what the principles say about enhancing thecredit union charter. The principles state that the credit unioncharter is the best vehicle for serving the needs of consumers andcall on CUNA to "support and advocate the strongest possiblefederal and state charter enhancements for credit unions." To thosewho cite bank authorities on business lending, capital and the likeas reasons to abandon the credit union charter, we believe thebetter solution for their members is instead to attain enhancedcredit union charters that give credit unions more flexibility inserving their members. Major charter enhancements in the form ofnew risk-based capital standards and greater flexibility in memberbusiness lending are embodied in the Credit Union RegulatoryImprovements Act, H.R. 2317. It is important to note that thelegislation was developed to advance the credit union charter,state and federal, and to do so in a way that preserves balance inour dual chartering system. Credit unions, whatever their chartertype, size or membership, will in CURIA find "something foreveryone," which is the reason we chose this title for a new CUNAbrochure (available on www.cuna.org) educating credit unions aboutthe specifics of the legislation. For example, state and federalcredit unions alike will benefit from CURIA's member businesslending and substantial prompt corrective action reforms as well assuch regulatory improvements as allowing more of the type ofexemptions banks and thrifts have for broker-dealer and investmentadvisor requirements, permitting leases on land of federalfacilities, and exempting member business loans to nonprofitreligious organizations from current MBL limits. Some of thefederal credit union provisions in CURIA will also apply to statecredit unions if they have "wild card" or parity provisions intheir states, and if not, CURIA once passed will provide greaterleverage to seek improvements in state credit union laws. Bysteadily improving the charter in this way, we believe the "limitedauthority" argument for converting to a bank becomes even harder tomake; indeed, it becomes invalid. CUNA and the leagues willcontinue to build congressional support for CURIA as well asstate-level legislation that allows credit unions to keep pace withtheir members' financial needs. And we will do so taking great careto keep the dual chartering system, which is never static, fromtipping off balance in either direction. The race to the top isnever really over. What's most important, especially in times suchas these, is to keep climbing higher. Dan Mica is President and CEOof CUNA. He can be reached at (202) 638-5777.