EL SEGUNDO, Calif.-Though the federal charter is not perfect,and California's progressive regulatory style has lured a number ofcredit unions to a state charter, Xerox Federal Credit Union CEOBill Cheney, said he is content to work to improve it. "We feltthat with branches in eight states and members across the countrythat for our credit union, the federal charter provided betterregulatory flexibility for us and we can also take advantage of thefederal preemption," Cheney, NAFCU's board secretary, explained. Headded that the majority of the membership is outside of Californiaand relies heavily on electronic services. Cheney recentlytestified on behalf of NAFCU to the Senate Banking Committee onnecessary regulatory relief for federal credit unions. He explainedthat one of the most helpful provisions from the Financial ServicesRegulatory Relief Act (H.R. 1375) in the House and the Credit UnionRegulatory Improvements Act (H.R. 3579) would permit multiplecommon bond credit unions that convert to a community charter tomaintain their select employee groups. Though Xerox is still XeroxFCU's primary sponsor, the credit union has added a number of SEGs,Cheney explained. With the legislative change, Xerox FCU couldchoose one of the communities it currently serves for its charterwhile continuing to serve all the remaining SEGs. Other provisionsin the legislation that would be helpful to Xerox FCU would raisethe loan maturity limits, expand permitted CUSO investment, andbroaden investments Still, the credit union has been able to expandin other ways. It recently added four underserved areas inRochester, N.Y., Dallas, St. Petersburg, Fla., and Chicago. Cheneyexplained that there were really two reasons Xerox FCU decided toexpand into these areas: "A combination of diversification of ourfield of membership as well as just having the ability to reach outand serve the community in those markets." "It's something thatXerox has been very supportive of," he added. "They're what I wouldcall a caring organization, try to be a good corporate citizen, sothey've been very supportive of our efforts to reach out and helppeople in those communities." The credit union is going to continueto try to expand within its existing markets for now. As far as thebankers are concerned in credit unions' pursuit of regulatoryrelief, Cheney said credit unions have to do what they have to do."They're not going to support anything that we want to do so Iexpect to hear them oppose what we want to propose," he said. "Idon't like the fact that they're going to oppose it but at the sametime, we have to do what's right for credit unions." Beyond theitems in CURIA and reg relief, Cheney said he is unsure whetheralternative capital will still be necessary for credit unions. Therisk-based capital system in CURIA may serve as a short- orlong-term solution. "Secondary capital is something that needs tobe addressed, but it's something that needs to be done in a waythat doesn't jeopardize the structure of credit unions," Cheneystated. "So I think there are going to be reasonable approaches tothat, but I think it's something that's going to take a longerperiod of time. I think it's important to get risk-based capitaldone and then talk about what some reasonable approaches tosecondary capital might be." Congressman Brad Sherman (D-Calif.)has said he may introduce legislation on secondary capital forcredit unions and has directed the General Accounting Office tocomplete a study on it. Cheney commented that it is very helpful tohave someone like Sherman, who is a CPA and a lawyer, and "reallyunderstands these issues." It is very important to Cheney not toalter credit unions' structure, which is why he has stayed withcredit unions through nearly his entire career. "I think it's aunique environment for business in the whole member-owned,cooperative structure at the credit union. The opportunity to, itsounds a little corny but, the opportunity to help people out andmake a difference in people's lives," he said. "You answer to aboard of directors and you answer to the membership but you don'thave to answer to shareholders, Wall Street, et cetera. You can befocused in our business on the member. We don't have the servingtwo masters quandary here, that a bank would have, for example." Asa finance major in college, banking made sense, Cheney said,"Credit unions just seemed to me like a better way to do that." Oneof the ways his credit union helps its members is through financialeducation. Through its broker-dealer XCU Capital, now owned by 17credit unions, the credit union offers Xerox employees financialplanning seminars, particularly on retirement savings. Xerox FCUalso holds Camp XFCU for its younger members where they learn aboutthe credit unions and financial responsibility in a fun environmentwith prizes and food. The credit union is also very active in thelocal schools; they are very interested in attracting youngermembers. Prior to working at Xerox FCU, Cheney was a consultantwith Arthur Andersen for five years and was offered a job atSecurity Service FCU in Texas while he was implementing a dataprocessing system he had recommended while consulting for them.Once the system was implemented he rose from senior vice presidentand chief information officer to executive vice president. Heserved at Security Service for 10 years. Outside of work, Cheneydoes a lot of volunteering. He is an assistant Boy Scout master forhis son's troop, serves on the board of the American Red Cross ofGreater Los Angeles, and is involved with Heal the Bay. He alsolikes golfing, fishing, skiing and hiking. [email protected]