WEST PALM BEACH, Fla. – Credit Union Times wanted to get credit union board input on a few hot button issues. So we asked Desert Schools Federal Credit Union Board Chairman Frank Davidson; State Employees Credit Union of North Carolina Board Director/SECU Foundation Board Chairman Tom King; and Pacific Service Credit Union Board Chairman Charlie Diaz to weigh in on the following questions: CU TIMES: What do you think is the most important issue facing credit unions today and why? DAVIDSON: The big issue is having a clear understanding of what the credit union role is and making sure future members are aware of the advantage of joining a credit union and that the benefits we offer are unique-like owner-members and that we return profits to the membership via lower loan rates and dividends. KING: The biggest thing is to make sure we don't lose sight of why credit unions were created and we've got to make sure others understand what we're all about too. That is one of the issues out in the forefront that is causing us trouble because it is not only people on the outside that don't understand but also a lot of people who are in the credit union family that don't understand how we are different. DIAZ: There are a couple of issues as far as I'm concerned. One of the biggest is this political bankers movement to get credit unions taxed. Credit unions provide a good alternative for consumers and the underserved-if you think about it we help keep the majority of financial institutions from having unreasonable rates and force them to provide better service. Another issue is the irrational pricing from auto loan manufacturers is making it more challenging for credit unions to compete and capture that part of the market. CU TIMES: What makes for successful board and CEO relations? DAVIDSON: Obviously the biggest factor is trust built on sound policies and clear directions given on what the board expects and having a clear strategic plan and understanding of the direction. There has to be an understanding of the difference between policy and administration- policy is the broad brush strokes of basic operation and administration is the day-to-day operations and making decisions to make those concepts of policy established by the board operational and continuing the flow of information. KING: Simple-trust, honesty, integrity and communication. DIAZ: The board has to trust in their CEO that she or he will make good sound decisions and the board has to make sure they don't micromanage. The board and the CEO have to have the same goals, which is providing the best service to members and competitive rates, and sometimes they have to be able to agree to disagree. CU TIMES: What do you think about the credit union to bank conversions happening today? And is it a concern that these board members would be paid post-conversion? DAVIDSON: The members of a credit union have to make the decision of what is best for them as a financial organization as they are the owners of it and they should weigh facts. If it is to their advantage to convert to a bank-which I can't see personally- but if there is an advantage then they have to act accordingly. Now if there is a personal financial benefit or gain it should be included in information that goes out to members making that decision. If I'm getting a salary or some other benefit after the conversion as a board member or administrator of that credit union then members should be made aware of it in order to make an informed decision before the vote. It is ultimately about what best meets the needs of the community, personally I don't agree with converting to a bank but that is the credit union members' decision-that's part of being an owner. KING: I think those credit unions trying to do that have totally lost sight of their mission and it seems to me they are more concerned about the credit union than the membership and as far as anyone benefiting from it I think that shouldn't ever happen – any money made should just go back to the membership. DIAZ: It is disappointing to hear that a credit union can't compete but if the board and credit union members want to become a bank then they should be allowed to. Each member has a vote and it is up to them to determine if they want to continue as a credit union or change to a bank and they should understand how becoming a bank will affect them-because it absolutely will. What concerns me is if the board or credit union executives will personally financially benefit from the conversion because at that point I don't think they really have the credit union's best interests in mind and when that happens they basically are no longer serving the needs of their members. CU TIMES: What do you think of board term limits? DAVIDSON: Well I'm not a good person to ask since I've been on this board for a long time. Again it depends on the individual credit union considering the pros and cons of term limits. There is no one right solution that fits for all credit unions. For example one of the processes we have built in is basically when a board member is up for nomination review by the committee if that person shouldn't be considered then it is made known. It is about what's best for the membership and I think this is true of all credit unions if any member wants to run for the board they can get the signatures and be elected. It's happened on our own board. Someone was defeated and then that same person went out the next time and ended up getting elected. It wasn't an easy situation but if there are people that feel that strongly about being on the board, and willing to go the extra mile then they must have lots to contribute. KING: I'm against term limits because there are so many various board sizes I think it is hard to set a limited time. I also believe you need experience on the board. Now I don't think any board should have a whole board with the same members that have been in place for 15-25 years; you need to rotate people throughout and the board has to be representative of your membership young, old and ethnic diversity. If you try to set term limits you'll lose some of the board experience that is brought to the table for younger board members to learn from. DIAZ: I'm against it because the knowledge and experience of quality board members is hard to find and to have someone leave simply because of a set limit hurts the credit union. Conversely, term limits enable a board member who is not contributing to outstay their usefulness. As long as a volunteer is helping to effectively lead the credit union he or she should be able to continue to do so as long as they can.