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NEWPORT BEACH, Calif. – NACUSO President Bob Dorsa prefers to look at the glass half full when it comes to federal credit unions’ expanded incidental powers. When he reflects on the NCUA Board’s unanimous decision at its July 26 meeting to allow federal credit unions to apply for and add on new authorities, as needed and to derive unlimited compensation from their activities, Dorsa said, he hopes federal credit unions “use their expanded incidental powers in a productive fashion to strengthen credit unions. It would be short sighted of them to think that the expansion of their incidental powers means they can replace their need for CUSOs.” Actually, the partnering of small credit unions with larger ones to jointly form new CUSOs has more appeal now, Dorsa offered. “I still think that a $75 million credit union has a lot to gain from partnering with a large credit union,” he said. “Expanded incidental powers may be great for the Navy’s (FCU) and Pentagon’s (FCU), but the masses of federal credit unions are still good candidates and have a lot to gain from partnering with other credit unions to form a CUSO to offer services,” said Dorsa. Dorsa advocates credit unions use the powers of CUSOs to strengthen the CU movement, instead of opting to merge small credit unions because of the economies of scale in offering products and services. “What happens if we shrink 50% in number from where we are now? This shouldn’t happen if credit unions use CUSOs to expand their base of products and services to remain competitive,” said Dorsa. “Granted, credit unions’ powers have changed, but the economies of scale to do things like offer trust services have remained the same and the rules of the game with the competition have remained the same,” Dorsa emphasized. “Plus, credit unions have less margin to work with. The economies of scale and the benefits of offering services through a CUSO outweigh the increase in credit unions’ incidental powers.” Two product areas that will be prime for CUSOs to venture into in the future are trust services and real estate brokerage. The latter, said Dorsa, has been a dormant area and one that CUSOs haven’t tackled. He cautioned that offering these types of products takes more study and understanding, especially as they concern the possible ramifications on credit unions’ tax status. “The things that keep us unique and what keeps us in good standing have to be preserved,” Dorsa said. Dorsa is worried some credit unions will think that just because they’ve had someone in charge of offering products like IRAs, that they can do just as well managing trust services to the CU’s members. Don’t underestimate what’s involved with offering these types of products, he advised. “The level of service bar is constantly being raised. Members are constantly demanding more and better quality services. Credit unions need to face this and learn they have to cooperate and share their resources through multiple-owned CUSOs, rather than try to offer these services themselves.” -

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