Both CUNA and NAFCU plan letters to the department this week, reminding the Treasury of the work credit unions do helping consumers otherwise without financial services and how their particular governance and capital requirements mean they need an independent regulator. Executives from CUNA in particular seemed almost bewildered at how the Treasury, an agency that appeared to have had a strong relationship with the credit union industry in past, could apparently misunderstand credit unions so badly.

CUNA Deputy General Counsel and Senior Vice President for Regulatory Advocacy Mary Dunn pointed out to reporters April 7 that former Treasury Secretary John Snow was a regular attendee at CUNA Government Affairs Conferences and that the Treasury Department had a strong relationship with the credit union industry under the previous years of the Bush Administration.

"We are concerned that some of the people who came in with the current Secretary might have swallowed banker rhetoric about credit unions," Dunn said. In addition to the letters, Dunn said CUNA would also likely seek a meeting with Treasury officials.

Dunn and other CUNA staff said that they knew Treasury officials had been hearing from bankers as they took in advice from industry about the Blueprint. Nonetheless, the association said it was stunned by the report and quickly concluded that the current Treasury leadership did not understand or appreciate credit unions.

"The credit union provisions not only disregarded the administration's stated support for credit unions but also portrayed a complete misunderstanding and misrepresentation of our mission, purpose and function," wrote Dan Mica, CEO of CUNA in a April 9 letter to Treasury Secretary Henry Paulson.

The association also filed a Freedom of Information Act request with the department, on behalf of CUNA's Credit Union Magazine, eager to review any documents and e-mail that might have flowed from banking trade groups to Treasury about the Blueprint.

"Thus far, media organs including the Wall Street Journal, the New York Times, the Associated Press, the Boston Globe, the Philadelphia Inquirer, Forbes, the Washington Post, Politico, Congress Daily, PBS's Nightly Business Report and Bloomberg Television have reported on the impact that the Blueprint would have on America's credit unions and on speculation concerning special interest group influence on the Blueprint's formulation," wrote CUNA General Counsel Eric Richard in the April 3 request.

"This media attention and attendant public interest in the Blueprint and possible special interest group influences on it are likely to continue for a short time after its March 31, 2008 release, but will likely dissipate thereafter. Therefore, the information has a particular value that will be lost if not disseminated quickly."

Much of both associations' immediate attention has focused on David Nason, Treasury's assistant secretary for financial institutions. Nason has been identified in some media channels, particularly the Wall Street Journal, as having played a key role in the development of the Blueprint, especially the parts addressing financial institutions.

Nason, whose background includes experience on Wall Street and the Securities and Exchange Commission, told the Wall Street Journal in an April 1 article that he had spent Sundays at Paulson's home discussing and debating the Blueprint.

"Paulson is a very strong personality, and David just thrived in that interaction. He is a good interlocutor for Paulson because he is comfortable saying exactly what he thinks," Randal Quarles, a former senior Treasury Department official, told the Journal.

The paper also described Nason as "the son of a UPS driver" and said he "takes a practical approach to his job," adding a quote from another former Treasury official to the effect that "He really takes his time to learn the ins and outs of an issue and immerses himself in the details."

Nason's role in the Blueprint moved meeting with him quickly to the top of both CUNA and NAFCU's agendas. NAFCU's CEO Fred Becker and other association executives met with Nason on April 8. CUNA's Mica, along with Chief Economist Bill Hampel and Richard will meet with him on April 14.

Becker pointed out that NAFCU has a long history with Nason and characterized the meeting as good, adding that NAFCU has always found Nason willing to listen to the association about credit union issues. He recounted that NAFCU met with him before he was nominated to his current office and was among the attendees at his swearing in.

Becker said that NAFCU opposed the Blueprint but did not consider it to have been written as an attack on credit unions.

In its most long-term view the document presented an idealized world where the department outlined a regulatory structure, which might have been perfect if they were starting from scratch, Becker explained. "If they were doing it all over maybe it would have been better to have one charter and one insurance fund, etc., but the world is not that way and won't be."

In Becker's view, the Blueprint by definition did not focus as much on individual charters as on presenting an image of what an overall regulatory structure might look like. In this regard, the proposal should be seen more as theoretical than practical, he contended.

That view has strongly influenced NAFCU's approach to the report. For example, Becker said that NAFCU used only part of the meeting with Nason to express its opposition to the Blueprint's proposals for credit unions but also brought up the Credit Union Regulatory Improvements Act (H.R. 1537) and other credit union legislative and regulatory priorities.

"Certainly in the long term we will keep an eye on the Blueprint," Becker said. "Treasury has many career staff, and ideas in Washington have a way of coming around again. But does that mean we are going to spend large amounts of political capital on fighting it? No."

But he stressed that NAFCU would seek to keep its long-standing relationship with Nason and other Treasury officials growing. "The way I look at it, we can stand outside the [Treasury] building and throw rocks at this guy, or we can go inside and talk to him. We are going to keep going inside to talk to him," he added.

Meanwhile, feedback from Capitol Hill seemed to reflect favorably on Becker's view of the report as House Financial Services Committee Chairman Barney Frank (D-Mass.) put his previous verbal assurance of support into a letter. From the podium of a recent hearing on the regulatory burden from the Internet gambling law, Frank told CUNA Board Secretary Harriet May, CEO of GECU in El Paso, Texas, that Congress would never follow the Blueprint's recommendations on credit unions.

He followed that reassurance up with an April 3 letter to Mica, addressing his former colleague as "Dan."

"I understand your dismay at the proposal by Secretary Paulson that would in effect abolish credit unions," Frank wrote. "I was in Africa when I received a summary of the plan, and I did not see in it this particular provision. Of course I am completely opposed to it and I can assure you that as long as I am chair of the committee–indeed I think as long as there are members of Congress who know the value of credit unions on the committee–no such proposal will have the slightest chance of succeeding."

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