Credit Union Trade Groups Split On Enlarging Regulator's Board

The National Association of Federal Credit Unions is lobbying against legislation that would add a state regulator and another director to the board of the National Credit Union Administration.

The trade group last Tuesday sent to every Senate Banking Committee member an 11-point letter arguing against a proposal by Sen. Phil Gramm, R- Tex., that would expand the federal regulator's board to five directors from three.

The Arlington, Va.-based association said tampering with the structure of the federal agency could have unforeseen repercussions that would erode the NCUA's independence.

"For example, there has been talk for some time of splitting the regulatory function from the insurance function of NCUA," said David Miller, chairman of NAFCU.

The bill, which has no cosponsors and is considered a longshot, was introduced by Sen. Gramm in April at the urging of the trade group's rival, the Credit Union National Association.

That group claims that the bill would help federally insured state- chartered credit unions by adding a voice to speak on their behalf.

But NAFCU argues that if the regulator's structure were to be modified, credit union opponents might seek other changes. In the past there have been proposals to put Treasury Department officials on the NCUA board.

Further, NAFCU claims that because no state has put its full faith and credit behind the federal insurance fund, there is no reason for state regulators to sit on the board.

Besides claiming that a state regulator would be unable to devote full attention to the federal regulator and would increase its costs, the trade group pointed out that the interests of state and federal governments conflict.

For example, the National Association of State Credit Union Supervisors is suing the national regulator over a new rule eliminating shared management between corporates and trade groups.

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