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ORLANDO, Fla. – In a spirited National Issues Forum held at CUNA’s Symposium, attendees dictated the topics covered – and they covered the gamut. From private insurance to field of membership expansion, the hour and a half session saw attendees touch on some controversial issues. The forum, facilitated by Credit Union Times Publisher Mike Welch, featured a three-person panel that included GTE FCU President/CEO Bucky Sebastian; Missouri CU System President Rosie Holub; and CUNA SVP of Governmental Affairs John McKechnie. Right off the bat Sebastian raised some questions about NCUA. Using a flip chart, Sebastian showed how NCUA’s budget has risen while the number of CUs has declined over the last 20 years. He pointed out that NCUA’s budget was $30 million in 1980 and there were 18,000 credit unions then. In 2002, NCUA’s budget was $140 million and he said there are now 9,000 CUs (according to NCUA there are actually 9,814 as of June 30). “What’s wrong with that chart and who is watching. The fact is there are half the number of credit unions to be supervised and we’re spending five times more money to do it. We’re looking at an industry that’s becoming extremely more productive and the agency has become extremely less productive,” said Sebastian. CUNA President/CEO Dan Mica grabbed the mic in the audience and asked whether today’s CUs are harder to regulate given the growth of assets. Sebastian said no. “It takes no more to look at an account with $1 million than an account with $100,000. We all send them 5300 reports electronically,” said Sebastian. While Sebastian harped on the point that no one is watching NCUA, McKechnie said NCUA is no different than the other regulators in terms of who is watching. “NCUA is under no greater or less scrutiny than other federal regulators. Congress and congressional committees oversee NCUA, Treasury, FDIC. The idea no one is watching the watchdog isn’t exactly right,” said McKechnie. The session quickly turned to bankruptcy as facilitator Welch pointed out that CUNA has called bankruptcy reform its No. 1 legislative issue. But what did the audience think? Welch asked, and only a spattering of hands indicated it was a pressing issue at their CU. McKechnie noted that there aren’t too many big legislative CU issues out there right now, and there’s nothing wrong with that. “Fortunately there are no life and death acts right now. We are not in the middle of an H.R. 1151 style relief bill. Reg-relief is another bill we hear a lot about. Many credit unions are facing bankruptcy problems, some are not,” he said. Field of membership came up next and Holub, whose state is in a dogged battle with the bankers over the issue, pointed out that what’s happening in Missouri does have national implications. “A lower court ruled in our favor that bankers did not have standing. We are hoping for another favorable ruling (in a higher court). The fact is that Missouri has been targeted, I believe, as somewhat of a test case for the country. They’ve been picking away at us not only on FOM, but also the Gold Banc case,” said Holub. Gold Banc sued CUNA for trademark infringement and subpoenaed many CUs from Missouri. McKechnie drove home the point that anything CUs do is a target for bankers. “The fact is banks will oppose anything credit unions will try to do to try and serve their members in a more favorable way. If you are in business, the banks in your area are not going to like it,” said McKechnie. He also noted some hypocrisy of the bankers when they lobbied Congress to pass Gramm-Leach-Bliley to rid them of the antiquated 1930 laws they had to follow, and yet, “they turn around and said, `credit unions by the way should remain exactly the same way they did in 1934,’ ” said McKechnie. Welch chimed in on taxation, an issue always on the mind of CU leaders. Asking the audience whether CUs will be taxed at some point, the majority were unsure. “ As long as credit unions don’t change their structure, there should never be any consideration for removing the tax exemption. Forget about size, buildings, staff, mortgages, business loans. None of that matters as long as you maintain that structure,” said Welch. Talk then shifted to alternative capital, a hot-button issue last year that has died down a bit. Holub doesn’t think it should. “I think secondary capital is a serious and significant issue today and in the future. We have emerging credit unions; we have new credit unions that have to have the ability to raise secondary capital. I think we’re being myopic and we’re not looking to the future if we don’t think about it,” said Holub. Sebastian said “what capital?” “There’s no capital in the credit union movement anywhere. We have reserves and undivided earnings. The tragedy of 1151…. was the way credit unions are organized and grown has changed dramatically. The brilliant framers of the Federal Credit Union Act in 1934 set up a system where you had to reserve a portion of your earnings until you reach a goal, but there was no absolute dollar amount required.” “That was changed with 1151. Now there’s an absolute percentage required. As you grow, you are hardpressed to meet the absolute target that has been set with 1151. I would argue that when the American people need their credit unions the most, we’re constrained because it lowers an arbitrary number that foolish people in Congress put on us,” said Sebastian. McKechnie said getting congressional support for alternative capital will be difficult. “It’s quite an educational process to get Congress to be aware of our need for additional capital. Our efforts to get congressional support is not going to be easy and it’s something everyone in this room is going to have to be prepared to help us with,” he said. An audience member next brought up private insurance, which has been in the news of late with the $2.8 billion Patelco CU, San Francisco, converting to private insurance. Sebastian, who served as general counsel and NCUA’s Executive Director from 1981 to 1985, said the NCUSIF formula of CUs contributing 1% of their assets to the fund was actually taken from ASI, a private insurer. “There is no such thing as private insurance. It is cooperative insurance and it runs exactly the same way NCUA’s does,” said Sebastian. He said there needs to be a law passed to allow “cooperative insurance” in all states. “There will be no dual chartering in reality unless and until there is dual insuring,” said Sebastian, to a rousing agreement from the audience. Mixing no words, Sebastian also called NCUA Board member Deborah Matz arrogant for some of her comments about the ignorance of Patelco members who approved the conversion. An audience member next questioned the stat that CUs have over 80 million members, being pegged at close to 83 million from some CU groups. He pointed out that members who belong to more than one CU are being counted more than once. He said that would put the number of members closer to 50 million, and asked with 280 million Americans, how can CUs get better penetration. McKechnie jumped on that one. “Congress and regulators have to get more flexible in FOM policies. I think there’s a broad consensus on Capitol Hill that consumer choice is a good thing,” said McKechnie. Holub said CU boards and management are the best publicists for credit unions. “We all have to do a better job telling our story so there is an overall awareness that credit unions are available,” she said. In blunt style, Sebastian ended with some words on working together. “I think if we don’t cooperate we’re dead.” [email protected]

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