I was slightly amused when I opened your Jan. 20 edition to thecenterfold and noticed articles from two noted credit unionlampreys, Marvin Umholtz and Alan Theriault. As they have done sooften in the past, both give the opinion that the credit unioncommunity faces severe difficulties. Umholtz focuses on thelong-term negative impact that the losses in our corporate creditunion system will have on natural person credit unions. Theriaultfollows that with his usual answer to our dilemma-convert to a bankcharter. Rather than point out the self-serving nature of theirpositions, I think it's only fair to acknowledge that there is sometruth to their basic premise. After all, even hypochondriacs getsick on occasion.

It is true that natural person credit unions will be responsiblefor repaying billions in losses from corporate system losses. Andunless this economy makes a dramatic turnaround, we will verylikely be facing hundreds of millions in losses from natural personcredit unions in the near future. It is also true that, undercurrent regulations, the only way for most credit unions to footthese bills will be from existing capital or future earnings.Either way, our business plans will be impacted by the limitedoptions afforded us.

Regulators, legislators, Treasury officials and anyone who canspell AIG have developed a deep desire to “protect” the financialsystem from future collapse. That desire will certainly lead torequirements for increased regulatory oversight and increasedcapital levels. From what I can tell, every community bank inFlorida is currently working on plans to increase their capital,even those not required to by regulators. They understand thataccess to capital is the biggest driver for their future successand, yes, survival. Is there any conceivable scenario where creditunions will not be facing the same issue?

But our response shouldn't be, as Theriault suggests, to cut andrun to the nearest stock option. The credit union charter is themost favorable charter for consumers. It just needs to provide forcapital options that will enable us to continue providing servicesto our members in this new normal economy. Those options(risk-based and alternative forms of capital) already exist andwork, just not for most credit unions in the U.S. It's time wecaught up to our fellow cooperatives around the world.

Important regulatory changes are being considered right now. Weshould do everything within our power to make sure our legislatorsand the administration understand that for credit unions to remainthe viable, consumer-focused financial institutions we were createdto be, we need capital reform.

Tom Dorety

President/CEO

Suncoast Schools FCU

Tampa, Fla.