ARLINGTON, Va.-Despite the conversions from federal to state charters, which NAFCU President and CEO Fred Becker believes is slowing or possibly stopping, NAFCU is still going strong and making improvements to the federal credit union environment, as well as to itself. Becker predicted that credit unions should be able to claim a few more legislative and regulatory successes in the near future. Even though NAFCU's revenue was down last year, the organization ended up $60,000 in the black because of cost saving measures. The organization revamped its benefits program to represent more what the younger generations expect. This tweaking has proven a positive change not only in the financials of the company, but also in staff retention, which is in line to increase over last year. However, Becker reminded, it's not benefits that make employees stay. "My sense in that the staff is happy and hard worked," he said. He also noted that much of the staff is taking advantage of the 401(k) program, and the number is on the rise. Becker credited the program's popularity to the savings speech he often gives, like during last year's Congressional Caucus. While NAFCU has been making these strides internally, the trade organization has not lost sight of its mission to improve the environment for federal credit unions. Becker advocated that it is important to have separate representation for federal credit unions for several reasons. To start with, it is what federal credit unions want. "In the credit union movement people want, from what I've seen, someone representing them as federally chartered," Becker commented. Additionally, when not all factions of the movement agree on an issue, for example the overhead transfer rate, the different parts need different representation to prevent paralysis. The credit union movement appreciates the competition between CUNA and NAFCU because it keeps each trade group in top form, according to Becker. Also, when one group can align with others and the other can remain independent, like during the bankruptcy reform debate, credit unions are able to force a better position from all sides. But what sets NAFCU apart to its members from its sister trade association, Becker said, is the direct membership approach of the association. Because the group is smaller, members can call up Becker or anyone else and get a fast and accurate response, he said. Even though NAFCU is smaller than CUNA, it can still pack a punch in Washington, whether on Capitol Hill or at NCUA headquarters. In its efforts to enhance the federal charter, NAFCU said that federal credit unions can already claim a few victories. On the regulatory side, federal credit unions with single sponsor charters are now able to continue serving groups following a corporate spin off. Additionally, federal credit unions were pleased to see San Francisco, one of the nation's largest cities, approved for a community charter. One of the greatest regulatory accomplishments for federal credit unions is opening up the federal regulators budgeting process, which NCUA Chairman Dennis Dollar announced last week. "Ultimately, he knows it's credit union money he's spending," Becker said. In particular, it's federal credit union money Dollar is spending given that credit unions not only pay an operating fee, not assessed to state chartered, federally insured credit unions, but federal credit unions also pay 1% into the National Credit Union Share Insurance Fund for insurance, which also partially funds the agency. Between the change in the overhead transfer rate from 50% to 66.7% and the expected proposal of an 18-month examination cycle, the NCUA budget, which has increased in recent years despite the reduction of the other federal financial institutions regulators' budgets, is expected to decrease. They have also made great progress on the Hill, with NAFCU lobbyists visiting the office of each member of the House Financial Services Committee and the Senate Banking Committee. "A year ago, Congress was tone deaf to any problems with the federal charter," Becker pointed out. Lawmakers felt the problems were regulatory and regulators blamed the problems of the federal charter on the legislators, he explained. Now they both realize the problems are a combination of the two. With the enhancements federal credit unions have already achieved, Becker said the "flight" from the federal charter is certainly slowing, if not completely stopping. He added that he had heard from at least four credit unions that had converted from federal to state charters, that they regretted the switch. Of those NAFCU members that do convert to a state charter, a substantial number do remain NAFCU members. One opportunity federal credit unions may have to state their case is during hearings Senate Banking Committee Chairman Paul Sarbanes (D-Md.) has promised each of the financial services industries for later this year, Becker pointed out. NAFCU has maintained contact with his staff on the matter. Some near future regulatory successes Becker predicted would arise during the July board meeting. "The meeting will bring to fruition things NAFCU has been working on for a long time," he said. Acting Dollar has already let the cat out of the bag about the 18-month examination cycle, Becker pointed out. Also Dollar's Regulatory Flexibility proposal should be on the table, along with incidental powers and some large community charter conversions, Becker said. As Becker previously stated, these positive movements may be stemming the tide of conversions from federal to state. "The charter conversions are a lot like what Mr. [Alan] Greenspan (Federal Reserve Board Chairman) is doing with the interest rates," Becker said. In other words, the regulatory changes are made little by little, many at the suggestion of NCUA Chairman Dollar, who wants to reduce government interference in the marketplace, but the effects will not be felt for another six to nine months. In the slightly distant future, at the end of Becker's three-year contract, he expects NAFCU to become even more proactive, more hard hitting, and find even more ways to further communicate with its members. "Even if everything was perfect [regarding credit union-related laws and regulation], there are ways that we can improve," Becker said, adding that it will never be perfect. Therefore, there will always be a role for trade associations. [email protected]

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