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WASHINGTON-America’s Community Bankers revealed its softer side last week during its annual Government Affairs Conference when it showed its support of credit unions’ option to consider conversions to mutual savings banks. Though taxation is still on the group’s radar screen – ACB Senior Vice President of Corporate Communications Bob Schmermund assured – the group is really targeting its attacks on the recently passed NCUA regulation that stiffens requirements for credit unions converting to mutual savings banks. The bulk of ACB’s members are mutuals. Schmermund emphasized that the recent reports of conversions in the works for large credit unions does not detract from the banks’ arguments that bank-like credit unions should be taxed but actually “underscores” it. “If credit unions want to be credit unions, they should be credit unions,” Schmermund said. “If they want to be a bank, be a bank.” He said he welcomes the conversions and at least that way they pay taxes like a bank. According to ACB’s Priority Issues brochure that the group encouraged members to leave behind during Capitol Hill visits this week, “The NCUA should not be permitted to artificially maintain jurisdiction over institutions seeking a legitimate charter choice to pursue alternative, fully disclosed business strategies that serve the best interests of the communities in which they operate.” ACB President and CEO Diane Casey-Landry’s last rallying cry before wishing attendees good luck in their lobbying was to point out that credit unions converting to mutual savings banks should not have artificial roadblocks in their way. They are actually opting in to paying taxes in order to better serve their communities, she pointed out. She noted that it is a positive message and has gotten a positive reception with lawmakers so far. “We would much rather be for something than against something,” Schmermund said of the strategy, though sometimes the latter is necessary. He said the conversion issue gives ACB credibility because the group is saying that it is so “outrageous” for a regulator to make a move “that so clearly smelled of self preservation.” Schmermund, formerly with the Office of Thrift Supervision and having been with ACB for 12 years, said he cannot remember a single instance like NCUA’s mutual conversion regulation. ACB even ran a full-page advertisement, featuring various scoops of ice cream, on the back cover of The Hill newspaper March 15, inquiring, “America is free to choose. Why can’t credit unions have choices, too?” The ad accuses NCUA of “trampling credit unions’ freedom of charter choice” even though the law permits credit union conversions to mutuals and censoring information that comes out of the converting institution directed at its membership. ACB Immediate Past Chairman Bill Zuppe of Sterling Savings Bank in Spokane, Wash. stated during ACB’s Government Affairs Conference, “ACB has taken a positive tact so financial intermediaries can serve their communities in a truly outstanding fashion.” Casey-Landry argued that NCUA’s regulation is “impinging on OTS” territory and is in direct conflict with their regulations and exceeding its own regulatory authority. ACB Executive Committee Member William White of Dearborn Federal Savings Bank in Michigan said NCUA’s regulation “smacks of protectionism” and is not different than if OTS put up a roadblock for mutuals looking to convert to stock-held institutions. What is also shocking to Schmermund is that, in the case of Michigan, the credit union league turned on the credit union attempting a conversion, Lake Michigan, as a “traitor,” when the league is supposed to represent the institution’s interests and paid dues into it. Schmermund said that ACB has been contacted by credit unions considering conversion regarding the process and what to expect. Around the time of H.R. 1151, concerned credit unions looked to the thrift charter as a viable option for them and ACB put out a publication on how to convert because they had so many inquiries. ACB Regulatory Counsel Krista Shonk added that the banking trade group is opposed to the 20% voter participation minimum in mutual savings bank conversions included in the Credit Union Regulatory Improvements Act last year. ACB would like the current standard of a simple majority of voting members to remain in place, which is similar to the standard for mutual to stock conversions. However, also relating to CURIA, Shonk said ACB would like to see Prompt Corrective Action as similar as possible between all institutions. She said she is still reviewing NCUA Chairman JoAnn Johnson’s latest proposal but the group is concerned about the double counting of the 1% National Credit Union Share Insurance Fund deposit toward capital. ACB has decided to remain silent on H.R. 749, the Expanded Access to Financial Services Act of 2005, which would permit credit unions to offer wire and check cashing services to anyone within their field of membership, Shonk said. [email protected]

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