The petition states that board membersshould be motivated by the unique contributions and needs of acooperative business. What exactly does that mean?

A White House petition written by Callahan & AssociatesChairman Chip Filson asks President Obama to select NCUA boardmembers who “understand the shared economic value for people andcommunities created by the cooperative model.”

Filson's petition, which as of March 13 had collected just 4% ofthe total needed by March 26 to elicit a White House response, alsostates that board members should be motivated by the uniquecontributions and needs of a cooperative business.

What exactly does that mean?

Filson said when Congress originally set up the American creditunion system, it intended to do more than merely establish a newfinancial charter that would serve a different need. Because therewasn't much to regulate in the early days of the NCUA, Filson saidthe regulator encouraged new federal charters.

“The hardest charter to get today in America is a credit unioncharter,” he said. “Part of the cooperative spirit that needs to be restored is theattractiveness and desirability of the credit union charter, ratherthan the Draconian process now in place where people who submitcharter requests are asked to go through more planning andprojections than existing credit unions.”

Chuck Bruen, president/CEO of the $1 billion First EntertainmentCredit Union of Hollywood, Calif., said he disagrees.

“It would be irresponsible to charter new credit unions in ourcurrent regulatory environment where many struggle every day tokeep up with the avalanche of rules, especially those mandatescoming from the Consumer Financial Protection Bureau,” Bruensaid. “The recent track record for newly chartered creditunions has not been a good one.”

CU*Answers CEO Randy Karnes said regulators shouldn'tnecessarily cheerlead for the industry and advocate growth andsuccess, but instead, they should be a part of that success. To doso, regulators must understand that credit union members are notonly consumers who need protection. They are also the owners of thesystem.

“If [regulators] don't understand credit unions have aresponsibility to both, they risk destroying the system from eitherside,” he said. “Right now, given the relationships regulators havewith credit unions, it's like, who even wants to come to thisparty?”

While the cooperative structure is important, there are moreimportant issues facing credit unions and their regulators, saidHenry Meier, associate general counsel for the Credit UnionAssociation of New York. Meier said in his opinion the ideal NCUAboard candidate would be a small business owner who understands theimportance of lending, has borrowed from a credit union and canexplain the value of credit unions to lawmakers.

“Yes, the cooperative structure is important, but in terms ofour survival and advocating for the industry, an appreciation forthe impact legislation has on us is more important,” he said.

CUNA Executive Vice President of Credit Union System RelationsSusan Newton made a point in an email to league presidents obtainedby Credit Union Times that trade association advocacy of aWhite House-appointed and congressionally-confirmed regulator isinappropriate.

“While we admire and respect Chip and his passion andcommitment, given CUNA's role here in Washington and our work withthe Obama administration and Congress, we believe it is simply notappropriate for us to lead the effort. Any public involvementby CUNA to advance someone forward onto the board of the agencythat we actively advocate with on a daily basis would likely bedetrimental to both the candidate and us,” she said.

Cooperative principles like autonomy and independence have alsogone by the wayside at the NCUA, Filson said.

“I think that is the tragedy of the CLF story, that essential pillar of autonomy and independence,”Filson said. “Our own liquidity safety net has been tragicallycompromised. The system's ability to provide its own self help ispart of the reason other regulators defer to the cooperativecharter and the regulatory system established there.”

Bruen said he thinks the CFL has outlived its usefulness andshould be closed down, and the Federal Reserve's discount window isa better emergency liquidity option.

“I fear that if some folks at the agency and in a few creditunions had their way, the CLF would be transformed into agovernment-run U.S. Central Corporate Federal Credit Unionsubstitute,” he said. “That's not a very good idea at allconsidering what we have just been through with the corporatecredit union crisis.”

Karnes said cooperative principles could help relieve constantpressure on the NCUA to prove credit unions need their ownindependent regulator,

“Cooperative principles make us different,” Karnes said. “Whenthe NCUA believes that, Washington believes that, and we have astronger system. But when nobody believes that, when it'ssimply about banking regulations, I think their position is weaker,and they're not even thinking about their own brand.”

Congress didn't create the credit union charter because thenation needed “nice banks,” Karnes added.

Bruen said while he is empathetic to Filson's desire to changethe status quo at the NCUA, the attention to cooperative principlesbelongs at the credit union level.

“The NCUA should stick to safety and soundness and stay out ofeverything else,” he said.

Meier said he thinks those advocating for the cooperativestructure to play a larger role in the credit union industry seemto be promoting it for its own sake.

“One of the things the petition reflects is this belief that ifonly we emphasize cooperative structure more, everything else willfall into place,” he said. “And it don't think that's thecase.”

Meier said he also thinks the cooperative structure isn't asimportant to potential young members as some think. He saidhe does like the idea of leading with the cooperative structurewhen recruiting volunteers and employees, but potential members aremostly looking for convenience and a good deal, regardless ofage.

“At the end of the day, is someone going to expect good serviceor cooperative structure?” he said. “I understand cooperativestructure is part of how we achieve good service in credit unions.But your average potential member doesn't care, and I think we tendto exaggerate how idealistic each new generation can be.”