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ARLINGTON, Va. – It’s taken six months and many discussions between Rep. Paul Kanjorski (D-Pa.) and representatives from NASCUS and various credit union leagues, but NASCUS has reached the point where it feels comfortable the congressman has “revised” his earlier position that state-charter credit unions should be restricted in order to keep the dual chartering system in balance. Comments made by Kanjorski in February at CUNA’s GAC in which the congressman hinted to attendees that Congress would likely look at “strengthening the federal charter” this year and that it might consider “restricting” the state charter to keep a balance between the two, touched off a maelstrom of discussions between NASCUS, Kanjorski, and some of the key members of his staff on the issue and NASCUS’ concerns about the ramifications of any action Kanjorski or Congress might take to restrict the state charter CU system. Representatives from the California Credit Union League also reportedly held their own discussions with Kanjorski about his comments because of the congressman’s concerns over the relatively large number of federal credit unions in the state that were at the time converting to state-charters. In a June 2000 letter to NCUA, Kanjorski had expressed his concern about the rate and number of federal-to-state charter conversions. that were taking place at the time. NASCUS Vice President, National Advocacy Jonathan Lindley said the association was particularly “distressed” to learn that Kanjorski’s comments at the GAC were totally impromptu and weren’t part of his prepared, written speech. “That made his remarks even worse,” said Livingston. The situation was further exacerbated, said Livingston, when NASCUS learned through members of Kanjorski’s staff that the dual-chartering system issue was “a live topic” among the congressman’s staff and that “they’d discussed it.” “You have to understand that as the ranking minority member of the House Financial Services Committee, Kanjorski has a lot of clout,” said Livington. “Kanjorski is thought of as Mr. Credit Union. If you were one of the 70 members of the committee and some thing came up regarding credit unions, you’d say `check with Kanjorski’s staff and see what they think.’ That’s why the situation was so critical to us.” In an attempt to ameliorate the situation, NASCUS President/CEO Doug Duerr said the association invited Kanjorski to speak with attendees in a closed-door session at NASCUS’ annual conference that will be held Sept. 7-10 in New Orleans to clarify his views about the state-chartered credit union system and the dual-chartering system. The congressman was unable to accept the invitation “because of prior campaign obligations,” said Duerr, but he did agree to be interviewed by NASCUS by responding to a series of written questions that were submitted to Kanjorski. “We told Kanjorski’s staff this wasn’t going to be a powder puff interview,” said Livingston. The questions proved to be very direct. Besides querying Kanjorski on his concerns about state-chartered CUs and the current safety and soundness standards for state regulation of CUs, NASCUS also posed questions to Kanjorski on: whether he was still concerned about “parity” powers for the federal and state credit union systems; whether state-chartered CU powers should be limited to those permitted federal charters; should the federal charter be improved to remove any perception of “lack of balance” in the dual chartering system; his advice to state credit union leaders to improve their relationship with members of Congress; advice to state CU leaders on improving services to CU members (a complete transcript of the interview is available on NASCUS Web site, www.nascus.org/communications/stateline/july-august-stateline.pdf.) According to NASCUS, Kanjorski’s responses to the association’s questions showed a “different perspective” on the dual-chartering system issue than the one the congressman expressed at GAC. In response, for example, to NASCUS’ question asking if Kanjorski was still concerned about “parity” of powers for the two CU systems, he said, “I strongly support allowing credit unions to choose the legal framework that best allows them to serve the needs of their members.” Regarding whether he feels state-chartered credit unions’ powers should be limited to those permitted federal CUs, Kanjorski said, “A dual chartering system for credit unions will work best when there is experimentation.Limiting the powers of state-chartered credit unions to those of federally chartered credit unions would generally not allow that experimentation to occur.” Kanjorski also stressed that he “believe strongly in maintaining a robust and viable dual chartering system for credit unions, but we need to work together at the federal and state levels to ensure that this system remains in balance.For the dual chartering system to work well, we need to maintain the proper balance.” Duerr said NASCUS, like Kanjorski, wants to ensure the credit union dual chartering system remains in balance, “but you have to put that in the right perspective,” Duerr said. “The dual chartering system depends on the viability of both the federal and state-chartered credit union systems. The vision shouldn’t be misconstrued to mean there can’t be differences between the two systems.” In fact, said Duerr, the allowance for differences between federal and state-chartered credit unions is what’s differentiated credit union history from the banking industry’s history. In the banking world, said Duerr, state banks can not do anything that national banks are not allowed to do. “Credit union history has been that the states were autonomous and could do things differently than federal credit unions,” said Duerr. “The credit union system as a whole has been recognized as being successful because of this difference. “When you start talking about parity powers for the state and federal credit union systems, we recognize that’s similar to what you have in the banking environment. So that becomes a serious risk and challenge to the credit union dual chartering system. When the ranking minority member of the House Financial Services Committee delivered his remarks at the GAC and then his staff member Todd Harper who’s Kanjorski’s legislative director and also the professional minority staff member for the House Financial Services Committee, also mentions it also in a GAC breakout session, your eyes have to open and you have to ask yourself what is the implication of their comments.” Duerr went on to say that: “If federal credit unions’ powers are restrictive, then what comes to the plate is trying to make decisions and find ways to repair what’s broken. Logic says you eliminate the areas that constrict federal credit unions, and you don’t do that by imposing constraints on state-chartered credit unions. If you do that, then you wind up reducing both federal and state-chartered credit unions to their lowest common denominator.” The NASCUS president pointed out that in the early 1990s, the tide of charter conversions was mostly going in the direction of state-to-federal charter, and that was because the state charter wasn’t competitive with the federal charter, said Duerr. To remedy the situation, state regulators got together and improved their respective state credit union acts. “NASCUS never suggested at that time that federal credit unions’ powers should be rolled back so they’d look like state-chartered credit unions’ powers, so why should state-chartered credit unions’ powers be constrained now?” Besides, he added, if Congress is going to restrain credit unions’ powers, it may wind up opening the door for them to convert to other, non-credit union type of charters.” “Balance is important, but it doesn’t mean there can’t be differences. That’s what makes for innovation,” said Duerr. -

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