FB: I think that we've done a lot, if you think about it. We've developed a very good relationship with the regulator. I know [these are] contentious times with the regulator these days, but as I noted from somebody making a statement this morning–Bill Rissel at Fort Knox–there's also contentious times in the banking industry. I think regardless of the regulator today, these are contentious times.

SSC: You mentioned "contentious" a couple times. Are there any regs in particular you're working with the agency on? Any exam issues that have come up?

FB: Exam issues are a tremendous issue right now. Anthony Demangone, our vice president of regulatory compliance, when we saw last year that credit unions were having compliance issues, did a nice white paper to help credit unions through this system. The white paper was widely acclaimed by NCUA as well as by the credit unions who've used it, and we've made it free and available to the whole credit union industry, not just NAFCU's members, because we're all going through this together, and the losses that we go through affect each one of us.

SSC: The last few years have been difficult times for credit unions–it's gotten them to see beyond their own four walls. What do you think are the top two to three issues for credit unions?

FB: I think the top issue is reinventing the business model. For the past year we have been saying that the legislative and regulatory and economic pressures are going to create a very different environment for all financial institutions going forward, and that credit unions have to step back and take a hard look at their business model and their strategic planning sessions and discuss it at each board meeting and figure out how they're going to adapt to the future, because the future is going to be very different than it is today.

SSC: What about particular issues like supplemental capital and member business lending?

FB: Yes, absolutely still on the radar for credit unions. I would point out that [the member business lending bill introduced two weeks ago by Sen. Mark Udall] is fairly restrictive. One of the issues I think we have in the industry is some are very concerned that we'll have as a result of credit unions getting into increased member business lending a future situation like we did with the corporates, where we'll have to pay for it through the insurance fund. But if you take a hard look at that legislation, it's very restrictive. And I encourage the whole industry to get behind it.

I think one of the problems we're having today is some credit unions want supplemental capital, some credit unions want member business lending, but they're not binding together to support each other on their various issues. Going forward, there's going to have to be some generalized support to move these things forward.

SSC: Have you seen more dissention in the industry, more division?

FB: I wouldn't say "division" or "dissention"; I would say more people questioning. And the questioning–don't get me wrong–is good. I think one of the problems that led to the corporate situation is everybody just trusted the corporates as opposed to keeping a watch with what was going on, and that led to the crisis. We may have been able to prevent it if people paid more attention to what was going on with the corporates we're investing in, etc. And so it's a good thing that people are questioning. But when they question, I think that they have to take a hard look at it and come to a resolution–listen and have a discourse back and forth.

SSC: One of the organizations that has taken some of the heat for that corporate debacle has been the NCUA. Is the agency making the right moves to ensure that it has the expertise on staff, whether it be corporates or member business lending?

FB: I think that they're hiring the new examiners–I don't know the criteria for which they're hiring the new examiners. Clearly the NCUA is partially responsible for what happened. I don't buy the excuse that the regulator couldn't do something because it's not legislatively or regulatory written in stone. If they see things going south, they had the ability to step in. At the same time I do think that corporate stabilization–they had to do that. It did preserve the system, and they had no choice but to do that at that time. I think it's NAFCU's position since the beginning–and I'm glad that others now are adopting it–is this is up to the member owners of the corporates to determine, under the rules and regulations set forth by NCUA, not someone else to say, 'corporates, this is the way it ought to look like in the future' in a dictatorial manner.

SSC: The NCUA has also been vilified for becoming a little strict with its examinations, but that's also justified, I would think too, correct? The agency getting tougher?

FB: Well, I think the agency has to be consistent in being tougher. They have to ask the right questions, and it has to be handled in the right manner. One of the issues we continue to hear about is guidance–the examiners coming in and saying guidance is a regulation. We were very pleased recently to see Bob Fenner saying "No, guidance is not a regulation."

SSC: The NCUA has come up with some framework and has the regulation in place for the corporates. What's next for natural person credit unions? Do you see any future trouble on the horizon?

FB: There are a number of natural credit unions that continue to struggle in this environment. I think, again, we're coming out of the storm. Hopefully there won't be another significant economic downturn. Obviously what's going on in the Middle East creates some concern as to a future economic downturn. Thus far, things seem to be holding fairly well for us. And we need to recognize that there are forces beyond us that we just have to adjust to, and we have to be prepared for what's known as the black swan; that is, the event that you just can't anticipate, but you nevertheless have to be prepared for.

SSC: There are also some large troubled credit unions that are privately insured. Does that concern you?

FB: I'm concerned about any credit union and the reputation risk that any credit union gives. Hopefully, we will come through this with the privately held insured credit unions like we're coming through it with those that are federally insured, and we'll have no difficulties. I would say at the same time that the qualifications to transfer to the NCUIF are fairly strict in statute and regulation, and as a result of that it may be that some of the privately held insured credit unions cannot get into the federal system. That will be very unfortunate to them and their members, but they made a choice to go a certain direction, and we believe they have to live with that choice.

SSC: The NCUA has a proposal out to ask for voluntary assessments from nonfederally insured credit unions. What position has NAFCU taken on that?

FB: We've taken a position of being opposed to that, as well as opposed to [the proposal that] you can only join one corporate credit union. Speaking of the corporate credit unions and the volunteer training, I would note this: I think in this day and age, what goes through the business industry or the commercial industry or the for-profit eventually flows through the nonprofit. And I think that the board members of credit unions need to recognize that their duties and responsibilities are no different if they were on the board of GE, or Wal-Mart, or AIG. And the fact that they're volunteers, or not paid, or the fact that the regulator comes in and examines then, or the fact that the regulator even has someone on site, does not absolve them of their responsibilities–their fiduciary responsibilities–and that's the reason we've done training with regard to that as well.

SSC: There is also a trend toward consolidation of the credit union industry. Explain to me how that affects your trade association.

FB: We've come through this storm very, very well. Unlike the rest of the industry–and in this sense I'm speaking about the association industry–I think about three- quarters to maybe more associations ran in the red… [W]e were in the black every year.