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VIENNA, Va.-While CUNA is busy touting the efforts of its Renaissance Commission, the CEO of the largest credit union in the country-and CUNA member-is dead set against some of the recommendations in the report. CUNA’s Board is supposed to put its seal of final approval on all, some, or none of the recommendations at CUNA’s Symposium next month. Navy Federal Credit Union President and CEO Brian McDonnell said that while he agrees with a large percentage of the recommendations to come out of the Renaissance Commission report, the ones he is concerned about-namely the credit union board-determined field of membership, separating NCUA from the insurance fund, and private insurance for federal credit unions-are the major aspects of the report. CUNA President and CEO Dan Mica noted that CUNA was happy to receive a letter from Navy and others who are weighing in on the Commission report. Even though McDonnell’s letter strongly stated his opinions, Mica was pleased that it was presented in a “cooperative manner” and offered “continued dialogue” on the matter. McDonnell wrote a letter to Mica dated August 8, stating that while he could support some of the recommendations in the report, others could be disastrous to the credit union movement. “[P]articularly some [the recommendations] under the Business Lending and investments categories are onerous because, over time, they will degrade the uniqueness of credit unions, but I firmly believe pursuit of open fields of membership and separating NCUA and the insurance fund will do irreparable harm to credit unions,” the letter read. “I am particularly concerned that undefined, overlapping, perhaps even unenforced, fields of membership will most hurt small credit unions, and, clearly, the movement needs to protect and nurture small credit unions.” McDonnell is particularly concerned about the consequences of taking some of the credit union issues listed in the Renaissance Commission report up to the Hill, which he said CUNA already has done. “When dealing with vision statements, you have to realize what the consequences are.Anytime you go up on the Hill, you’re going to have trade offs,” he said. McDonnell noted the Credit Union Membership Access Act (CUMAA/ H.R. 1151) of 1998 in his letter, in which credit unions were limited in their commercial lending authorities while seeking other authorities. Additionally, his letter pointed out that CUMAA was so new and thoroughly thought out by Congress that changes to the member business lending provision would be “futile, at best.” In a four-page supplement to his letter, McDonnell wrote, “The Commission provided little justification for its views and positions. No attempt was made to recognize or discuss potential adverse consequences of its recommendations.There is no evidence that the Report reflects a consensus or representative cross section of the credit union movement.” “There is always potential and that’s why we say we’re not ready for an all out battle on Capitol Hill,” Mica said. That is exactly why CUNA is trying to position itself ahead of time, so hopefully no steps back have to be taken, he explained. Mica also denied that any of the recommendations have been shared with lawmakers. CUNA has sent a letter and has been talking with Hill staffers about the Renaissance Commission and its process as a “heads up,” but has not shared any specifics with them, he said. “We know when the Renaissance Commission came out, those who oppose the credit union movement would try to spin it,” Mica explained, which is exactly why CUNA wanted to give Congress a forewarning of what was coming down the road and what they would hear from the bankers about the report. One very senior congressional leader even complimented CUNA on its handling of the Commission’s report on the Hill thus far, according to Mica. McDonnell commented that he felt regulatory changes are in order before consideration is given to a legislative coup. Mica agreed that under the current NCUA Board membership, CUNA will more than likely pursue regulatory changes to start. However, he added, the trade association is going to take an “opportunistic” approach to legislative changes, meaning “bite-sized changes” will be attempted in the legislative arena as the opportunity presents itself. “I would like to think within the CUNA Board, there will be people who will recognize the consequences,” McDonnell said. The bankers could easily begin a feeding frenzy from the remarks in McDonnell’s letter, but neither McDonnell nor Mica are concerned. The banking contingencies thrive on complaining about credit union activities, both said, or as McDonnell stated, “They’ll bitch about anything.” McDonnell’s other key concerns include maintaining the credit union difference, he said. McDonnell said that he is afraid that if NCUA is separated from the National Credit Union Share Insurance Fund (NCUSIF), legislators may merge it with the Federal Deposit Insurance Corporation (FDIC) for banks and thrifts, thus eliminating some of the distinction between banks and credit unions. Additionally, private share insurance for federal credit unions, McDonnell said, is tantamount to “trying to fix something that isn’t broken.” He noted Rhode Island’s past problems with private insurance. McDonnell also said he was concerned about the Renaissance Commission’s proclamation that credit unions can declare victory in its goal of serving persons of modest means. He raises the issue that if credit unions have achieved their goals, what further purpose can credit unions serve. While admitting that on a micro sense, credit unions have not totally eliminated the need for payday lenders and title loan companies, Mica stated, “In the macro sense, I think we do serve all people and those of modest means.Credit unions do feel that they make a very solid effort to serve all their members.” He emphasized how the banks were “caught red-handed” not serving their communities and were slapped with the Community Reinvestment Act, while credit unions were able to remain free and clear of legislation in this regard. While McDonnell used his chance to present information at one of the Renaissance hearings through United Airlines Employees Credit Union President and CEO Bob Bream and these points were made then, McDonnell felt it necessary to reinforce Bream’s testimony with a letter after many of the items Navy objected to were included in the Commission’s report. Many of the issues raised by McDonnell all boil down to the taxation issue, which would further erode the credit union difference, he said. “Although taxation would have significant economic consequences for most credit unions, loss of the tax exemption would undoubtedly bring changes in attitudes and philosophies that would wipe out the distinguishing characteristics of credit unions,” McDonnell wrote. Mica explained that raw numbers would certainly not be the determining factor in the recommendations that survived the scrutiny of the CUNA Board. The board members own opinion on what is possible would also be a factor. “It narrows down to the political judgments of our board and the professional judgments of our staff,” he said. Mica admitted that it would be “disingenuous” to say that the opinion of McDonnell and the $15 billion Navy Federal Credit Union do not weigh heavily in the collective CUNA mind. However, Mica underscored, “It would be very inappropriate to let any one member, any one member, swing the moods or needs of the entire movement.” McDonnell told Credit Union Times that he would wait and see how the CUNA Board acts before reconsidering its membership in CUNA. – [email protected]

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