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PHILADELPHIA – Though it was not the prime topic by a long shot, the banker attacks in Pennsylvania over three field-of-membership applications plus the trend toward more community charters were two issues that surfaced at the first meeting of the year for the Credit Union Council, a unit of the Federal Reserve Bank of Philadelphia. “I think this was the first time that I can recall that these issues received this kind of attention,” said the Council chairman, Diana Roberts, CEO of Hershey FCU who is in her second year on the Fed CU panel, the only one of its kind existing among Fed district banks. The CU Council, set up in 1981 to provide a forum and dialogue between Fed management and CU leaders on economic issues, had on its April 2 agenda two discussion questions dealing with changes in the “banking landscape” and a projection for “key initiatives in the next few years.” “That’s when we had this discussion about community charters and we had some very good sharing of information with Jim McCormack describing the stepped up efforts of bankers to attack credit unions,” recalled Roberts noting that the president of the Pennsylvania Credit Union Association, who is an ex-officio member of the Council, detailed the banking industry’s new strategy of “a state by state” approach “after it failed on the national scene.” Taking part in the CU Council meeting and joined by Philadelphia Fed economists and managers was the president of the Philadelphia Fed, Anthony M. Santomero, a former finance professor at the University of Pennsylvania’s Wharton School, who has long urged wider input from CUs in helping shape monetary policy. Santomero, who prior to taking the Fed job four years ago, did consulting work for banks and regulatory agencies and came in contact with CU organizations, has previously said CUs “provide strength and an insight into economic conditions” in the district which encompasses eastern Pennsylvania, Delaware and southern New Jersey. “I think he was interested in the discussion about community charters but he stayed neutral,” said Roberts of Hershey FCU. The sometimes informal, wide ranging discussion also covered CU conversions to mutual, ID theft and direction of mortgage rates as well as banker proposals to tax CUs. Another member of the Council, Louise Lingenfelser, president/CEO of UGI Employes FCU, Wyomissing, said she enjoyed the “open and frank discussion” at the April 2 meeting noting also Santomero and the other Fed executives there “seemed interested and they didn’t seem to be ready to scoop us out.” She explained that she had been fearful the Philadelphia Fed, like other district banks which are heavily influenced by large banks and big business, “might get out the dirt on us.,” But that was not the case, maintained Lingenfelser. The discussion, she said, centered “on how our loans were doing as compared to other states and what the prospects were for chargeoffs.” One big concern as voiced by the Fed economists is an increase in variable mortgage rates and what impact that might have on portfolios. Lingenfelser, like other participants, voiced praise for Santomero and the Philadelphia Fed for continuing its CU Council over the years “and their willingness to be progressive.” “No other Fed bank does this,” she said maintaining it was refreshing to see such an open approach to CUs. The Fed staff “seemed very well read and fully aware” of CU issues. PCUA President/CEO McCormack called the April 2 meeting at the Fed “excellent” and “well scripted,” but he minimized the idea there was much formal discussion of community charters. Like other executives in the Leagues and CUNA, he said the industry “welcomes the opportunity” for more direct input from CUs on Fed Councils and district boards. Federal statute stipulates composition of Fed district boards based on asset size of banks and business entities in the region. There are provisions for community reps on the district boards and CUs may eventually seek an entry in that area or a direct seat. In a formal statement issued last week on the April 2 meeting by a Fed spokesman, Santomero described the session as “upbeat” with members reporting “good financial conditions” and “evident growth.” Asked if other Fed district banks might form Councils, Santomero said “I know from my work with credit unions over the years, that keeping in touch with the movement and interests of credit unions is extremely valuable.” Apart from the 12-member CU Council, the Philadelphia Fed also maintains a separate Community Bank Council and a Business Council which function in much the same manner as the CU Council. -

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