Knowing The Value OF A DOLLAR

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"I'm a credit union true believer," says Dennis Dollar, the odds-on favorite for the most popular former NCUA Chairman in recent history. Admittedly, the field is narrow and contrast strong, given that he succeeded Norman D'Amours.

Dollar spoke plainly about the agency's very public travails without personalizing them.

"Norm's message was inconsistent in what he said. His was a very pro-regulation stance," says Dollar. "The turmoil that surrounded NCUA in the late 90s took a toll on those it regulated, but more importantly, with those who oversaw it on Capitol Hill and in other federal agencies."

The calm that followed the storm and the bipartisanship he was able to draw from Yolanda Wheat and later, Geoff Bacino, both Democrats (Dollar was a Republican appointee) enabled the agency to improve its image in Congress and achieve improvements in regulatory flexibility, expansions in field of membership and CUSO operations while also focusing on the needs of small and moderately-sized credit unions.

Those accomplishments and his overall tenure as chairman have led to Dollar being honored by the National Credit Union Foundation with a Herb Wegner Award, to be presented in Washington this week.

"I'm proud of what we were able to do there," said Dollar. "The agency is seen in a much better light today in the congressional arena and in the credit union world than it was prior to my becoming chairman in 2001."

That improved outlook may yield further dividends as credit union trades try to get new legislation passed, secure expanded CUSO authority and obtain access to capital. It's difficult to do those things, Dollar said, unless Congress has confidence in the NCUA. While Congress can't give carte blanche approval to such powers, they would be a much harder sell without a stable and well-run NCUA, he added.

Not Concerned About FOM Challenges

Challenges to the agency's field-of-membership expansions, particularly community charters, don't overly worry Dollar, either. "Those who attack NCUA for granting large community charter FOMs just don't get that dual chartering means healthy diversification for both state and federal credit unions. The community charter option has been available since 1934 -it's not our creature, but a longstanding option-and I always point out that the first credit union, St. Mary's Bank, was a community charter.

"There are certain states with more liberal FOM rules (than NCUA's), so if the NCUA tightened its rules it wouldn't prevent those expansions anyway," he continued. "The definition of community has expanded over the years, just as all financial interactions have expanded. They may be challenged, like in Utah, where the judge said the standards weren't met. So, OK, there may be occasional challenges to the application of the rules by some courts."

That's no reason to panic, Dollar emphasized, "The NCUA has a very strong defense. They are not interested in retracting on community charter approvals. It's a safety and soundness agency, foremost, and FOM diversification makes that necessary. The fact is the NCUA is not authorizing larger FOMs just for growth's sake, but for the safety and soundness such diversified fields bring to those institutions."

The chief reason credit unions apply for those large FOMs in the first place is the diversification factor, said Dollar. Likewise, the reasons many credit unions have had to close or merge with others is because of the lack of, or to achieve that necessary diversification.

Finally, Dollar reminded that in passing the Credit Union Membership Access Act, Congress had ample opportunity to limit membership to a single city or county (or other measurable means) but did not. "They left the definition of local community to the agency."

Dollar feels the agency has made those definitions rock solid and has staked his post-NCUA career on it. After leaving the NCUA, he could have had his pick of many positions and did have several offers that tempted him. "I had some options. Some Wall Street firms interested in building on their relationships with credit unions called me. I think it's notable that they see the credit union business as good players. There were also some Washington-based firms, K Street lobbyists that typically court former agency heads. I just waited it out and began to think about building my own book of business. Then, Kirk (Cuevas, his NCUA chief of staff), was leaving at the same time and we thought it over and decided to start our own firm."

That firm is called Dollar Associates, with offices in Alexandria, Va., and, most recently, Birmingham, Ala. It's a credit union management and consulting firm that lists conversions to the community and TIP charter at the top of its services menu. "The bulk of our work is in FOM and regulatory compliance, with some strategic planning, marketing and development and government relations work," Dollar said. But at least half their work deals with FOM issues, with some 25% in government relations, 15% in marketing and 10% involving strategic planning.

Moving To Birmingham

Dollar lives in Birmingham, where his wife Janie represents a professional line of clothing named CABI, while he and Cuevas take to the road on business. Janie suffered "teacher burnout," Dollar said, and now loves what she does. They picked Birmingham because it allowed Janie to be close to their two children, Chris, a graduate student at the University of Tennessee and his wife, Sally, and Lindsay, a sophomore at the University of Southern Mississippi, along with Dollar's mother, who lives in Jackson, Miss.

"It's a good mix, an enjoyable mix, and I get to decide for myself if the client is a good fit for the firm. I like to work with progressive and visionary leaders in the movement."

Dollar describes the FOM work as mostly involving "finding where the landmines are," particularly for credit unions seeking expansions in underserved areas. "We review the documentation, particularly in community charters. We know what NCUA expects. We wrote the book, so we know. While most credit unions have ongoing relations with the NCUA and with the various state agencies, they may not know how to structure the documentation. That's what we're spending a great deal of time on."

Dollar believes that his and Cuevas' work as consultants is an opportunity, in many ways, to carry through with the work they did within the agency. "Look, I spent seven years trying to empower credit unions to have great opportunities and extended product offerings. I don't want to see that momentum lost by them for not taking the time to do it right, so it's invigorating to be a part of helping that work. I like to think I hit (the ball) out of the fairway and into the rough!"

Dollar sees the rate of credit unions adopting the community charter only growing, despite the recent stall this past year. "When I came to the agency only 7% of credit unions were community charters; they number 20% now. In the near future I predict that'll become 30% and 50% in just a few years."

He points out that the agency's Access Across America initiative has had "tremendous results" in incorporating underserved areas to a credit union's FOM, "and there are still advantages to be taken there. It's a great way to achieve geographic diversity while keeping select employee groups."

Dollar doesn't lobby the agency directly, as he's mindful of the rule forbidding former officials of doing that, but the one-year moratorium is fast approaching. Still, Dollar wants to stay far away from any perceived conflict of interest, and admits, "there are many ways to advise a client."

The other philosophical question roiling the movement, and fueling many banker trade attacks is the small versus large CU issue. And here again is where Dollar's 'true believer' status comes front and center.

"Small credit unions are no more important to the movement than are large credit unions. It's no less a credit union because it grows. It is about structure. Credit unions should not be punished for their size."

Dollar said that recent statements made by Board Member Debbie Matz indicate that she has a "heartbeat" for small credit unions and wants to provide support for them, "through PALS Workshops, for example."

It's an effort that Dollar supports, especially since he was once the CEO of just such a small credit union, Gulfport VA FCU in Mississippi.

"Ms. Wheat and I formed the Small Credit Union Program to do some of those same things. We didn't set up a separate department, but the idea was the same."

Coming to the NCUA as an experienced credit union chief executive gave him credibility because other CEOs accepted him as one of their own, Dollar said.

And as a former two-term member (eight years total) of the Mississippi House of Representatives (at age 22 he was the youngest legislator in the state and one of the youngest in its history), he knew how legislation was passed.

And while Capitol Hill is a far cry from the Mississippi House, grinding sausage is the same untidy process wherever it is done. The money is different, though, and Dollar acknowledged the large sums the credit union movement has raised for political purposes (for PAC and individual campaign contributions).

Protecting The White Hat

"There's always a danger that credit unions will be perceived as just another interest group when it participates in political campaigns, but the greater danger may be what happens if you don't participate," he observed. "I think you can wear the white hat, participate and do it in such a way that draws attention to the white hat. Credit unions have to tell their story and that means PACs and PR campaigns and strategy. They can't allow banks to define them. That's the cost of political capital, and that's just getting higher and higher."

Credit unions will never have the money the banking industry can muster, said Dollar. "We'll always be outspent, but we learned a lesson from (the Credit Union Membership Access Act), and that's not to lose ground ever again. That's also a part of what I'm doing now. I'm perceived as, and flattered to be so, an effective spokesman for credit unions."

So, as a spokesman, what does he say about credit unions converting to mutual savings banks? "Well, first, only 25 have done so out of some 10,000 credit unions, so it's hardly a trend. But those that have invariably gone to stock companies, the insiders have profited. That certainly raises eyebrows. But if you believe in the credit union philosophy of member ownership it's the members that have the right to give it up. The question is one of disclosure, and the NCUA has put requirements in place to make sure members understand what's at stake."

The Credit Union Charter

The other lesson of conversions, he said, is that "if a credit union charter isn't viable and regulatorily empowering, then credit unions will seek out other options. So then, if a credit union has to abandon its charter in order to be successful then we have to look at the charter."

Leaving the NCUA with the expectation that his replacement would be nominated in three months, Dollar opined that the White House may wait until summer and nominate two members, as Matz' term is up in August, "but that's just speculation. The short answer is 'I don't know.' I didn't lose a lot of sleep when I left because I was confident that JoAnn and Debbie would handle things well, and they have. But there is a potential for difficulty in a two-member board because one member can hold things up. Still, issues at NCUA are 90% fact-based and 10% philosophical; it's not partisan nor should it be. But it's still a Washington-based political appointment. I've been a minority and a majority member so it works well."

Dollar said he was honored by the Wegner Award, because "as a regulator, you never know if the accolades you get are heartfelt or mere sucking up, so my receiving this means that my contributions are seen as lasting ones."

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