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LANSING, Mich. – The appointment of Michigan’s new acting commissioner of the state’s Office of Financial and Insurance Services reinforces what credit union leagues have known and learned to work with: when state regulators are Cabinet positions, their term in office depends on the which party is in power in the Governor’s mansion, and leagues’ relationship with them can change depending on the outcome of an election. Michigan Gov. Jennifer Granholm named Chief Deputy Commissioner Ronald Jones acting director following the resignation earlier this month of Commissioner Frank Fitzgerald. Jones served as deputy commissioner since April 2000. Dave Adams, president/CEO of the Michigan Credit Union League said the league expected the change because newly-elected Gov. Jennifer Granholm is a Democrat, “I just didn’t expect it would happen so soon,” Adams said. “I thought they’d take some time.” Former governor, John Engler, was Republican. He served for three terms and appointed Fitzgerald to his position as commissioner. Two-thirds of the 450 credit unions that do business in Michigan are state-chartered, “so the state regulator’s position is a key position. That person doesn’t just influence state regulations, but they also have a lot of influence on the interpretation of the law.” With that in mind, Adams said the Michigan League has met with Gov. Granholm’s chief of staff and let him know that the League wants to be involved with the selection of the new commissioner and provide input. He added that the League supported Granholm’s candidacy, and “hopefully that gives us some credibility with the governor.” The League also met with David Hollister who heads of the state’s Department of Labor, Economic Development and Urban Growth which oversees the Office of Financial and Insurance Services. “I understand it’s the governor’s decision on who to appoint commissioner, but we want to encourage her to select someone who’s neutral to every industry that’s regulated under the Office of Financial and Insurance Services and not biased to any one group,” said Adams. The Michigan League is in the process of modernizing the state’s Credit Union Act for the first time in 15 years. “We’ve been working in lock step with OFIS to make sure the changes that are made are the ones we’re interested in,” said Adams, adding that legislation would be introduced “soon.” The League began work on modernizing the state’s credit union act before last November’s election, and Adam said the League knew going in to the process that it would be a “dynamic process” because they started it going in to an election. “Now there is a new governor, a new acting commissioner, and many new state representatives. But that could work to our advantage too,” said Adams. The Michigan League may feel confident in the appointment of Jones as OFIS’ acting director, but the Illinois Credit Union System has been looking at acting directors of the state’s credit union division and bank division since January when Sarah Vega and William Darr were laid off from their respective Cabinet positions by newly elected Democrat Gov. Rod Blagojevich. ICUS Director of State Governmental Affairs Keith Sias said the current acting director of the Credit Union Division, David Cavenaugh, is “rumored to be taking an early retirement soon.” “Sarah (Vega) was one of 75 people let go as a result of the transition from one administration to another, she was caught up in the politics,” said Sias. Blagojevich is the first Democrat to occupy the governor’s seat in the state in 26 years. “Whenever there’s a change of parties in the administration, you always lose a lot of people you had relationships with, it’s the nature of the situation,” said Sias. With both the permanent credit union and banking division directors’ seats open, Sias said ICUS is more concerned that Gov. Blagojevich might propose combining the two divisions as a way to save the state money and streamline the administration. Illinois is facing a $4.8 billion budget deficit. “There would be no savings because the credit union division is supported by regulatory fees paid for by state-chartered credit unions. No money from the state general revenue fund goes towards the division. Combining the credit union and banking divisions would only be symbolic,” said Sias. The Illinois Credit Union System has made maintaining the independence of the Credit Union Division one of its top priorities, he said. Not all state regulators are Cabinet appointees and subject to changes in appointments depending on the party of the elected governor. Some, like David Paul, commissioner of the Colorado Division of Financial Services are career civil service employees. Paul has been in his position since April 1988, which “makes him an `old-timer” compared to some state regulators, he quipped. He was hired in to state government about 25 years ago by then-Gov. Richard Lamm and headed up what was then called the Division of Savings and Loans and is now known as the Division of Financial Services. In 1988, the state legislature transferred the administration of credit unions from the Division of Banking to the Division of Financial Services. Paul assumed those responsibilities and has held them ever since. “Continuity and predictability has been good for both sides, state chartered credit unions and our office because state regulation has been more predictable,” said Paul. “State chartered credit unions know I won’t be gone with the next governor.” But that doesn’t mean Paul is unaffected by who’s sitting in the governor’s seat. “To a certain extent civil service employees are subject to the same forces as Cabinet appointees. I may not be a political appointee, but my boss is, and he sets the budget and legislative priorities.” Paul reports to Rick O’Donnell, executive director of the Department of Regulatory Affairs. He was appointed to his position by Gov. Bill Owens (R) who was elected to a second term last November. In addition to overseeing the Division of Financial Institutions, O’Donnell is also responsible for about 10 other regulatory divisions such as the Division of Banking and the Division of Insurance. “Just because I’m a civil servant doesn’t mean I’m immune to change,” said Paul. “Just like state regulators who are Cabinet appointees, I’m subject to changes in legislative and budget priorities.” -

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