The credit union industry doesn't want any part of regulatory consolidation.
Ralph Swoboda, president of the Credit Union National Association, says keeping its regulator out of consolidation plans is his No. 1 lobbying priority for next year.
In an interview, Mr. Swoboda said if necessary, he will pull out all the stops to prevent the National Credit Union Administration from being included in the proposed "super-regulator" along with the four major federal bank and thrift agencies.
The credit unions were not included in the Clinton administration's blueprint for a federal banking commission, but Mr. Swoboda remains on guard. A counterproposal by a private group, the Shadow Financial Regulatory Committee, would bring credit unions into the fold.
Speaking from his association's Madison. Wis., headquarters, Mr. Swoboda also indicated that bankruptcy reform and new business opportunities for credit unions are in his sights for 1994.
Q.: Do you see the National Credit Union Administration getting thrown into a consolidation bill?
SWOBODA: This is a real serious issue for credit unions. We believe that Congress will have the wisdom to follow the administration's lead and not include us in the consolidation. Credit unions are unique organizations, and to the extent they're treated just like banks, they're more likely to become just like banks.
The recommendations that Lawrence Connell [co-chairman of the Shadow Financial Regulatory Committee and a former NCUA chairman] reported on, I think, would be the death of credit unions.
He's suggesting that a new agency be organized functionally so it could have all banking, savings and loan, and credit union supervision handled in one place, and all compliance in another. That would inevitably produce a cookie-cutter approach to regulation, where one size fits all, and I think that would be a very bad thing for credit unions.
Q.: Death is a pretty strong word. Are you overstating the case?
SWOBODA: No, I don't think so. You wouldn't see it in the first year or first five year's, but ultimately, they would cease to be distinctive financial institutions in the same way savings and loans are becoming more like banks.
Q.: Do you have a game plan in case a bill comes down merging the NCUA?
SWOBODA: No. We don't think it will come into effect, and we'll try like the dickens to prevent that from happening. We'll fight hard to keep a separate regulator and insurance fund
Q.: If it does. would you go to petitions and a demonstration in Washington to fight against it, the way CUNA did in 1991 with Operation Grass Roots?
SWOBODA: Yes. Basically, that's what the grass-roots campaign was about: to prevent a merger of the regulator and the insurance fund. No one's come up with any idea justifying the inclusion of NCUA and the insurance fund, outside of a simplistic notion of simplicity.
Q.: What other legislative issues are you looking at for 1994?
SWOBODA: We're still hopeful that next year we'll complete meaningful reform of the bankruptcy laws. We're hoping that there will be hearings in the House on the bill the Senate committee came out with. There's still the community development financial institutions bill that we're interested in. But the most important issue - the one we feel most threatening - is the proposal to merge NCUA.
Q.: What sort of opportunities will 1994 bring for credit unions?
SWOBODA: I think that first there are increased opportunities for lending. We've seen an increase in credit the last half of this year. In fact, for the first time in a while, credit union loans are growing faster than shares. I think that reflects an economic recovery that's still under way.
Otherwise I don't see anything dramatically different.
Q.: Are any new services being planned for 1094?
SWOBODA: We have two mutual fund projects going on, one in cooperation with CUNA Mutual that's designed to operate a family of funds to individual credit union members. That project is well along and is in the process of getting registration. We plan to start marketing after the first of the year.
With U.S. Central, there's a project that's nearing completion to develop a family of institutional funds for credit unions. That's on about the same track - first quarter of next year.
Another major program we're in the initial exploratory stages on is a more affordable mortgage for low-income purchasers. In part, we're looking to use U.S. Central's medium-note capability as a vehicle for raising funds in money markets to enable us to offer those kind of mortgages. But that's still early on.
Q.: NCUA is coming out with a letter to credit unions regarding mutual fund disclosures. Is the trade group doing anything to educate members?
SWOBODA: It's part of what we've built into our program for all mutual funds. We feel very strongly that credit unions should be leaders in this area. of making it very clear to consumers just what the risks and benefits are of being involved with mutual funds.
We want to make sure that we go the extra mile in making sure out members will know what they're getting into.
One thing I want to avoid is the disclosure that really isn't a disclosure. It's a disclosure if you're a CPA or a lawyer.
Q.: What's become of the CUNA attack against banks, such as the public relations campaign in Utah?
SWOBODA: Our main goal is to put bankers on notice that there are more costs than their lawyers' fees when they bring one of these lawsuits. We've got some really good press coverage in Utah. It's clear from what's in print that banks are losing the public opinion war in Utah.
Q.: Are any other responses to the lawsuits being planned? Such as lobbying against legislation bankers would like or commenting charters?
SWOBODA: Nothing in particular I think we're just identifying opportunities as they come along.