NEW ORLEANS – Patelco CU President/CEO Ed Callahan isn't known for mincing words, and he lived up to his reputation when he pointedly told attendees at NASCUS' 2002 Annual Conference that the picture of the credit union movement the industry is accustomed to seeing that puts federal and state regulators on top and credit union members on the bottom below CUs and CU employees, is wrong. "Regardless if you're a regulator, a credit union, or a vendor, we're all dependent on 80 million members, not the other way around. They're what keep us going," he said. In what was his swan song to NASCUS since the CEO will retire at the end of this year, Callahan asked rhetorically, "Was the credit union movement better off when it had 23,000 credit unions and 10,000 members than now when it has 10,000 credit unions and 80 million members?" Callahan chastised those credit unions that use size as a tool to fight one another. "The threat of taxation is supposed to shut down the argument and get you to wimp away. The big credit unions aren't going to get anyone taxed," he stressed. In fact, said Callahan, credit unions are already paying twice as much in taxes on money deposited than banks do in the form of the $7 billion in taxes members wind up paying on the dividends they earn from their credit union. "Just check the arithmetic," he said. "We need to tell Congress that." Callahan also used the opportunity to offer his opinion on common bond – "When did we ever come up with the idea that common bond means parceling out fields-of-membership?" he asked. "Field-of-membership is all about power, and power holds down the number of Americans that can belong to credit unions. Nothing but positive will happen if we change our attitude about common bond and field-of-membership." State regulators say NCUA too rigid on ALLL definition NEW ORLEANS – State regulators meeting with NCUA Board members during the NASCUS annual conference criticized the agency for being too rigid in its determination of allowance for loan and lease loss (ALLL) the agency included in IRPS 02-3 it adopted in May. In March, the FDIC and the Securities and Exchange Commission issued parallel guidance on the issue for their respective regulated financial entities. In IRPS 02-3, NCUA stated that it intended "to provide the necessary parallel guidance for federally-insured credit unions." But state regulators are concerned that under IRPS 02-3 there may be more than one way to look at credit unions' loan loss allowance- such as CPAs, credit unions, and state regulators- and those ways may differ from NCUA's. Before NCUA determines if a credit union is over funded for loan loss state regulators want the agency to consider these differences. Among the keypoints of IRPS 02-3: * CU management is responsible for establishing an appropriate ALLL and documenting their methodology; * Methodologies should conform to generally accepted accounting principles (GAAP); * CUs must review all loans for relevant internal and external factors, loss history, collateral values, and methods to ensure they're applied consistently when estimating probably existing losses, but when appropriate, modify loss estimates for new factors affecting collectibility; The NCUA also emphasized the independent review of management's methodology and documentation practices by the supervisory committee, internal or external auditors. NASCUS regulatory development committee passes on taking debt cancellation position NEW ORLEANS – Members of the NASCUS regulatory development committee determined during its meeting at the association's annual conference here not to take a policy position for or against debt cancellation, although the committee agreed that the lending product is critical for state charted credit unions to explore offering. According to committee member Jay Petersen, CEO of Financial Plus Credit Union in West Des Moines, Iowa the committee recognized that it would be up to each state regulator to come up with policy on debt cancellation and that these policies would likely vary from state to state. The committee though agreed to encourage state regulators and state charted credit unions to do due diligence on debt cancellation. -

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