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The controversy over whether all credit unions should be required to have federal insurance for their primary coverage, as advocated by first the NAFCU Board, and later the Consumer Federation of America Board, has apparently hit a very sensitive nerve. Only a couple of weeks after the two national groups and some high-profile CU CEOs opposing private insurance made their views widely known, it appears that everyone connected with credit unions has a definite opinion on the subject. They are not hesitant to express it. At least it seems that way based on the number of e-mails, faxes, and letters going back and forth, and based on the huge numbers turning up on the Credit Union Times Web site (www.cutimes.com) voting poll on the topic. As this is being written, a phenomenal 5,600-plus votes have been cast in the one-question poll: “Do you agree with the position of the NAFCU Board that all credit unions should carry federal insurance?” Only 0.61% of respondents selected “not sure,” an amazingly low number in any survey that asks a controversial question. Over 99% choose “yes” (52.51%) or “no” (46.89%). The for and against totals have seesawed from the beginning, always remaining about evenly split. Credit Union Times has had controversial Web polls before, but never one that generated a response like this; not even close. There are many possible reasons why the number of votes is so astronomical for this type of poll. First, the issue at hand is important and far-reaching. Although the poll asks for only a yes or no, it should be obvious that weighing in on one side or the other with a simple yea or nay carries with it many implications. For example: credit union member benefits, politics, timing, credit union size, dual chartering, choice, full disclosure, safety and soundness, perception, competition, deposit insurance reform initiatives, historical perspective regarding private insurance providers, full faith and credit of the federal government, cost, and possibly some hidden agenda items as well. Second, unlike previous Credit Union Times polls, after a complete, high tech make-over, this one makes it incredibly easy to participate. To vote takes literally two seconds. The poll is right there on page one. No clicking is needed to eventually get to the poll. No additional clicking is needed to actually vote. Also, the poll has an exclusive feature of providing instant updating as each vote is cast. Third, there is some evidence that both the yes and the no forces are stirring the pot and attempting to get as many persons as possible who are sympathetic to their views to vote. That’s fine with us. The more participants, the more credible are the results especially since we have made it almost impossible for any individual to vote more than once. Fourth, for much of the time that the numbers were going up, the yes and no percentages seemed to mirror the percentages of state and federal credit unions. What seems to have gotten lost in all the noise surrounding the full frontal attack on the private insurance option is this important question: Why did NAFCU’s Board take a stand against private insurance in the first place let alone at this point in time? Objectors to my previously expressed views seem to conveniently overlook that point choosing instead to peg me as a staunch defender of private insurance. When I recently lambasted NAFCU for putting this topic center stage, I was not in any way making a case that private insurance was the way to go. Frankly, when $3 billion Patelco converted to private insurance it made me nervous for many of the same reasons the fed-only insurance advocates have stated so eloquently. Rather than argue the merits of private or federal insurance, my beef then and now is that there was absolutely no reason for lighting a fire under this ongoing controversy at this time. The credit union industry plate is overflowing with much more important issues and the list is growing. Some of these issues are threatening the very survival of some credit unions to continue as credit unions. Whether to select private or federal insurance coverage is an individual credit union’s board and membership decision. Quiet frankly, as a trade association representing FCUs, it is none of NAFCU’s business. Yes, I’m still harping on the fact that having a choice in this and many other important areas is much of what credit unions are about. And I’m still harping on the fact that NAFCU has however unintentionally caused a split with CUNA for all the world to see, including lawmakers, and banking industry foes. By weighing in on the subject as and when it did, NAFCU raises the question of having a hidden agenda. Is it just me or does it now appear that NAFCU is trying to protect its membership numbers? After all, if more FCUs choose to convert to state charters for whatever reason including the ability to then convert to private insurance, doesn’t that do two obvious things? First, NAFCU loses a member. Secondly, NCUSIF looses income. That in turns means that the FCUs will have to pick up the slack. Or state charters will by having to absorb even further increases in the overhead transfer rate (OTR). It is becoming more clear that this whole debate surfaced because of Patelco Credit Union and the fear that one or more other large credit unions may choose private insurance. That naturally lead to a more heated debate regarding the very existence of the private insurance option. Any such debate should have taken place in the privacy of credit union circles and should have revolved around the question of whether or not the fallout would be worth a public attack of private insurance. It isn’t. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]

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Peter Westerman

Credit Union Times

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