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WASHINGTON – CUNA admitted this week that its bid to form “distinct” Credit Union Councils at all 12 Federal Reserve Banks is an “ongoing” process after it received a cold shoulder to the idea from the nation’s most prestigious, the New York Fed. In a letter sent May 24 to CUNA President/CEO Dan Mica, the president of the New York Fed, Timothy Geithner, wrote the concept of a separate CU Council patterned after one operating for decades at the Philadelphia Fed is not “appropriate.” “The Federal Reserve Bank of New York has a Thrift Institution Advisory Panel that has representation from the credit union industry,” said Geithner. By including CUs along with other thrift segments on the panel, “we feel there is more benefit from the cross-segment discussions of market conditions and monetary policy than there would be if we met with each segment separately,” said Geithner. Geithner was responding to Mica’s May 5 letter which proposed the New York Fed set up a separate CU panel noting that CUs are regulated by certain Fed regulations “and are keenly interested in the regulatory and monetary policy operations of the Fed system.” In seeking greater representation at Fed banks, members of the CUNA Board have insisted that CUs have become in recent years noteworthy players in the economy and deserve a broader voice in shaping Fed economic policy and rate setting at the regional and national level. Historically and by law, the Fed district banks, their boards and their presidents are elected and appointed by the Fed Board of Governors in Washington with heavy influence from large commercial banks and corporations. Aside from the 12-member Philadelphia Fed CU Council, which meets twice a year, other Fed district banks in varying degrees maintain a handful of CU representatives on business advisory panels. However, it was noted that the Philadelphia Fed’s Council, established in 1981, encourages input from CU executives in its New Jersey/Pennsylvania/Delaware district and discussion “on specific issues of interest” to CUs. At its most recent meeting April 2, the debate joined in by members of the Fed staff and the Fed’s president Anthony M. Santomero, included discussion on field of membership, community charters and even the bank attacks. The chairman of the CU Council, Diana L. Roberts, who also is president of Hershey FCU in Pennsylvania, has called the Philadelphia Fed sessions beneficial to CUs and has helped advise the CUNA staff in drafting the Mica letter to other Fed banks. Roberts, who this spring was elected a new CUNA director, acknowledged the full CUNA Board became interested in the topic of Fed CU Councils most recently after reports on the April 2 proceedings in Credit Union Times. In rejecting the formation of a CU Council at the New York Fed, Geithner suggested in his letter to Mica that the existing Thrift Institutions Advisory Panel with CU representatives on it serves Fed needs and moreover, “we do not think it would be appropriate to expand the number of advisory panels.” Most of the regional Fed banks like New York have advisory panels, but Philadelphia is the only one that has the separate CU Council in addition to a Community Bank Council and a Business Council. In supporting the idea of its CU Council, the Philadelphia Fed in being outspoken about the economic benefits of the Council, notes that the panel “often gives us access to specific sections of the labor force such as police officers, firefighters, teachers and chemical producers.” A CUNA spokesman said the New York Fed’s rejection was not altogether unexpected since “this is an ongoing process” and takes time for the Fed system to acknowledge the industry’s emergence. “We feel this is something that makes sense and is something that we need to work on-to expose the Fed banks to the light of day,” said the CUNA spokesman. It remained unclear if the other Fed banks would follow the lead of the New York Fed in rejecting the CUNA proposal. A spokesman for Jack Guynn, president of the Atlanta Fed, said it was “formulating a response to the letter” from Mica and expected to respond late last week. Both the Richmond and San Francisco Feds said they were holding up their responses while awaiting new presidents slated to take over. The Mica letter “is being discussed internally and a response will be forthcoming in the near future” said a spokesman for the San Francisco Fed noting the regional bank “is right now between presidents.” Its newly appointed president, Janet Yellen, a University of California economist/business professor and former Fed governor, was named to the top staff post last April by Fed Chairman Alan Greenspan. In a Philadelphia Fed statement issued through Santomero’s office, Marilyn Wimp, head of public affairs at the Philadelphia Fed, acknowledged differing Fed bank policies. “Each Federal Reserve Bank relies on a variety of outreach opportunities to reach its constituencies and to maintain dialogue on industry trends in its region,” Wimp concluded. -

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