How NCUA Intends To Remain An Asset In Ensuring A Future For CUs

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The 2003 Credit Union National Association Governmental Affairs Conference (GAC) falls right in the middle of my two separate one-year anniversaries as a federal regulator of credit unions. Jan. 22 marks the first anniversary of my recess appointment to the NCUA board by President Bush and March 22 is the first anniversary of my Senate confirmation.

This past year has been one of the most exciting of my life. It's been a time of learning and transition, wholly infusing me with an appreciation for the credit union movement and those behind it.

My experience as an Iowa legislator and policymaker reflects the core of my personal and political philosophy. I admire and respect government closest to the people-local and state-because I have seen and been part of their good work. While my first year on the job has not diminished that perspective, it has enhanced my appreciation for the work and commitment being done at the federal level to address every facet of chartering, supervision, regulation and insurance-keeping both federal and state perspectives in mind.

It is my belief that an effective dual chartering system requires both a strong state and federal system that provides for innovative state- and federally chartered credit unions. As a regulator of federal credit unions, one of my goals is to ensure that the federal charter continues to be viable and attractive so that federal credit unions have the ability to compete in a changing marketplace. I convened an internal working group at NCUA that has been reviewing the current member business lending regulation and evaluating opportunities to improve it. The working group has completed its review and I will be discussing our findings at the GAC. Later, I plan to recommend some changes for the board to consider that will provide credit unions additional opportunities to better serve their members' small business lending needs. Additionally, the NCUA board has under consideration federal field of membership rule changes that are intended to keep the federal charter healthy in terms of appeal and strength.

These are just two examples of work underway and I will continue to evaluate what regulatory changes should be considered to keep the federal charter safe and sound. America's CUs benefit from a healthy dual chartering system where there is cooperation, consultation and communication that enables all credit unions to benefit. An effective dual chartering system is also one where the options available are safe and sound and allow credit unions to maintain long- term viability. The public judges credit unions on how well they address members' needs. The CUNA GAC symbolizes the cooperative spirit of this movement.

The credit union system you have built over the years is now enjoying the confidence of the American investing and saving public like never before. The integrity of rules, regulations and fair enforcement only adds to the diligent management demonstrated by credit unions themselves.

With so many people continuing to join credit unions around the country and committing more of their hard-earned money to your care, whether they know it or not, Americans are depending on your business decisions and the federal and state regulatory systems that assure quality and integrity. Well-run credit unions that efficiently provide consumer financial services in today's diverse marketplace are an essential and vital part of the financial community in the U.S.

Recognition of the quality and integrity of credit union supervision and regulation is important and ensures public confidence. It should add value to your organization and to the benefits you deliver to your members, whether it comes from your state regulator, NCUA or both. I have found that the dual chartering principle is intertwined within NCUA operations, even as we fulfill our charge to keep the federal charter attractive and healthy. Both federal and state charters must be vibrant and responsive to their membership, allowing room for variations, new initiatives and different points of view.

Let me mention some of the ways NCUA and state regulatory agencies work together:

* Examination and call report formats are developed by NCUA and used by the federal regulator and all but one state regulator, saving the system money yet allowing independent judgment of consistent reporting data.

* Availability of the full faith and credit of the U.S. Government that stands behind the NCUSIF for every state- chartered credit union.

* Examination hardware, including laptop computers, is uniform and provided to all state regulatory agencies by NCUA.

* NCUA develops a comprehensive training program and conducts this training for all federal and state credit union examiners. Additionally, NCUA subsidizes a state program training coordinator who is on-site at NCUA headquarters.

* NCUA and state regulators hold joint meetings and jointly perform select examinations. A state regulator sits on NCUA's National Exam Committee and state regulators have contributed to the crafting of risk-focused exams.

The dual chartering system is supported by NCUA in principle, in practice and in funding.

There is no monopoly on good ideas; the value of the dual chartering system is being demonstrated continually. I want to be sure that NCUA continues to contribute to the ongoing success of the entire system. You can justifiably claim a significant stake in the creation, building, strengthening, operation and future of the credit union system. NCUA needs to be an asset in this endeavor, and we recognize our responsibility and welcome your input.

JoAnn Johnson is vice chairman of the NCUA Board. Ms. Johnson can be contacted at 1775 Duke St., Alexandria, VA 22314, or at

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