The most recent and General Accounting Office (GAO) report oncredit unions, like most GAO reports, turns out to be a mixed bag-acommon characteristic of such reports, of which several are issuedevery day here in Washington and on virtually every subject underthe sun. One overriding aspect of the report cannot, however, beoverlooked-the ever increasing safety and soundness of ourindustry. To put the report in perspective and in the context ofother GAO reports, it must be noted that the GAO, which has beenaround since 1921, typically issues over 1,000 reports a year, andits officials appear before Congress roughly 200 times a year insupport of their work. There have, however, only been only twocomprehensive GAO reports on credit unions. The first was requiredas part of the S&L bailout legislation and released in July1991. The second, of course, was released just last month. The 1991report, “Credit Unions: Reforms for Ensuring Future Soundness,”runs 371 pages and contains more than 50 recommendations,including: 1) writing off the 1% deposit federally insured creditunions have with NCUSIF, 2) expanding the NCUA Board to five seats,and 3) eliminating the CLF. The most recent report, “Credit Unions:Financial Condition Has Improved, but Opportunities Exist toEnhance Oversight and Share Insurance Management,” at 174 pages, isjust over half as long as the first and, most notably, containsless than 10 recommendations. The 1991 report, while noting the“collapse of the thrift industry” and the “financial distress ofcommercial banks and pressure on its insurance fund,” found that“credit unions [in 1991] are in a relatively favorable financialposition.on average, they are relatively well capitalized,profitable, and liquid.” In its most recent report, the GAO states,“The overall financial condition of the credit union industry, asmeasured by capital ratios, asset growth, and regulatory ratings,has improved since our last report ..” In addition, in the 1991report, the GAO noted a “significant decline in recent years [1985to 1990] in the number of low net worth credit unions and in theirmarket share.” What is GAO's assessment today? According to thelatest report, “since 1991 there has been a significant drop in thenumber of problem credit unions as measured by regulatory ratings.”The ever-improving financial condition of our industry and ourenviable safety and soundness record, whether over the past decadeor since the passage of the Federal Credit Union Act in 1934, havenot occurred in a static environment. Simply stated, the evolvingfinancial industry in which credit unions must thrive and competecontinues to develop and change, at an increasing pace.Nevertheless, credit unions remain by definition institutions thatare: organized and operated for mutual purposes without profit; donot issue capital stock; are principally governed by volunteerboards; and have fields of membership. As such, our industryremains as unique and vital today as it was in 1934. The assertionin the latest GAO report that credit unions are becoming morebank-like is, therefore, without merit, and I remain unconvincedthat there needs to be any additional data collection in relationto serving low-income members in underserved areas. While although,the one-page summary in the “highlights” that precedes the body ofthe GAO report is also somewhat troubling because it states that,“recent legislative and regulatory changes have blurred somedistinctions between credit unions and other depositoryinstitutions such as banks,” it is important to note that the bodyof the report itself states, “Credit unions continue to differ fromother depository institutions because of their cooperativestructure” and “.credit unions are member-owned cooperatives run byboards elected by their members.” What is remarkable to me is thatin an increasingly homogenized financial marketplace, replete withcyclical scandals and periodic assaults on public confidence,credit unions not only remain viable and flourish, but that theyalso further distinguish themselves from other financial serviceproviders. That is why credit union leaders visit theirlegislators-to ensure their legislators are aware of and fullyappreciate the characteristics that clearly set credit unions apartfrom other financial institutions. When it comes right down to it,the most important part of the report was not written by GAO but byNCUA Chairman Dennis Dollar. The GAO customarily provides anopportunity for rebuttal and comments by those entities that areits prime focus. Thus, a six-page letter from NCUA's chairman toGAO is included in an appendix. In disagreeing with the GAO'srecommendations for more data collection, Chairman Dollar commentsthat such a recommendation, if implemented, would “imposesignificant and unnecessary data collection and reporting burdenson credit unions and would be especially problematic and burdensometo small credit unions.” Over 50% of credit unions that take onunderserved areas have less than $50 million in assets. One would,therefore, have to seriously question why anyone would recommendincreasing the regulatory burden on these small institutions whoare striving to serve their members and compete in today'sfinancial marketplace. In the end, some recommendations from thisreport may be implemented and some may not-an everyday result herein Washington. The fact that the GAO pulls no punches-it hasproduced stinging assessments of the bank and thrift industries inthe past-only accentuates its analysis and conclusions on creditunions' exemplary safety and soundness record. We may disagree withthe assessment of the GAO staff in some areas, but we have alwaysfound them to be professionals, giving NAFCU and the credit unionindustry the full and fair opportunity to present its case. Thedecisions on any recommendations lie ultimately not with the GAO,but with NCUA and Congress, and credit unions have never been shyin presenting persuasive cases in either arena. Should the banksuse parts of the report out of context, we will do as we alwaysdo-fill in the picture.