Saying it's time for credit unions and banks to be regulated under one body and with the same rules, Texas bankers are calling on the state to dissolve its separate regulator for credit unions.

The bankers say the public would be better served if credit unions were supervised under the auspices of the Texas Finance Commission, which already oversees banks and thrifts, said Chris L. Williston, president and chief executive of the Independent Bankers Association of Texas.

Credit unions are currently regulated by the Texas Credit Union Department, which was created in 1969. The department's advisory board has nine members appointed by the governor, six of whom come from credit unions.

"This particular group serves more as an industry cheerleader than an industry watchdog," Mr. Williston said. "And we're concerned with whether the public is being served."

But Richard L. Ensweiler, president and chief executive of the Texas Credit Union League, Dallas, argued that credit unions are distinctly different from banks and need to be treated as such.

"This would mean instead of credit unions having a regulator to focus on them alone, they'd be part of a huge agency," he said. "We were set up to be an alternative and this would fly in the face of that."

The Texas Savings and Community Bankers Association in Austin has not taken an official position yet on dissolving the credit union regulator. But Eric Sandberg, president of the thrift trade group, said it does support placing all financial services entities under one umbrella.

Under Texas' sunset law, state agencies and policies are subject to periodic review by the Sunset Advisory Commission to check their efficiency and effectiveness. The credit union department comes up for review at the end of 1996.

The commission will hold hearings in late fall and make recommendations about the department's future to the legislature, set to meet in early 1997.

Mr. Williston noted that the state auditor has previously recommended that the credit union department be folded into the Texas Finance Commission.

Mr. Ensweiler said that credit unions in the state have done very well in recent years, and that this was nothing more than another effort to launch an attack.

"I think bank trade groups are using this tactic to boost membership," Mr. Ensweiler said. "They have to have somebody to fight. There have been more credit unions chartered in Texas in the past three years than in the rest of the country combined."

As in many states, Texas bankers are unhappy that state-chartered credit unions are exempt from federal income taxes and state franchise taxes, which banks and thrifts must pay.

In addition, bankers have been sore over regulatory approvals for what they consider overly broad fields of membership for new credit union charters, and the expansion of existing institutions.

Deposits at Texas credit unions increased 68% between 1990 and 1994, to more than $21 billion, but they still fall far short of those of banks and thrifts. The state's 830 credit unions grew deposits by nearly $9 billion in that period, while bank deposits fell nearly $6 billion and thrifts were off nearly $21 billion.

Mr. Williston, who thinks the credit union department is secretive about the institutions it oversees, said his group just wants to have more knowledge of credit union activities, and a common regulator would help.

"We think banks should have more input into credit union expansion plans and operations, and right now we feel we're being shut out," he said.

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