If the NCUA changes the way CUSOs are regulated, it would“single-handedly kill the one competitive advantage the creditunion industry has,” said a Kansas CUSO CEO.

That advantage would be “a unique business model that enablescollaboration and innovation so credit unions can achieve economiesof scale, increase efficiencies, share intellectual capital,provide better service to members, and mitigate risk,” said LisaRenner, CEO of CU Holding Co. LLC in Lenexa, Kan.

The CUSO said it provides payroll, marketing, short-termlending, mortgage, title, and research and development services tomore than 200 credit unions.

“Increasing regulation will put CUSOs at a competitivedisadvantage with non-CUSO competitors,” Renner wrote in an Aug. 4comment letter to the NCUA. “First, it increases overhead costs for CUSOs makingit difficult to compete on price. Second, it exposes confidentialbusiness plans, balance sheets, income statements and customerlists.”

Renner said through decreased expense and increased income, CUHolding has benefited its CU owners and clients by hundreds ofthousands of dollars. However, measuring CUSOs by the same metrics used for CUs could be detrimental inthe long run.

“In the broader business environment, you would not measure anIT firm against a marketing company, or a payroll company against amortgage company. Yet, if all CUSOs are lumped together andmeasured against the same metrics, that's exactly what willhappen,” Renner wrote.

Loan losses caused by several business lending CUSOs should notbe a reason to penalize all CUSOs, Renner said.

“Even if CUSOs that make business loans pose a risk that needaddressing, NCUA's attempt to apply a regulatory cure for abusiness lending CUSO to all CUSOs is misguided when businesslending CUSOs are estimated to constitute less than 1% of totalCUSOs,” her letter said.