Roger W. Jepsen says his proudest achievement as the nation's chief credit union regulator is keeping his agency out of the headlines.

Mr. Jepsen, whose eight-year term as chairman of the National Credit Union Administration board ended Aug. 2, came aboard at the beginning of a banking and savings and loan crisis. But Mr. Jepsen managed to avoid the storm.

"We went through the same economic downturns as banks and S&Ls, but we always kept ahead of our problems," he said.

Marketable Skills

An amiable, soft-spoken man, Mr. Jepsen plans to remain in office until a successor is chosen, which may be as late as December. His future plans are still undecided.

"I'm not going to stop working," he said. "I possess a combination of age and experience that provides me with marketable assets" either to do consulting work or to join a corporate board.

He's been a hands-off manager at the NCUA.

"I see myself as a facilitator," he said. "My involvement is to support my staff in any way I can to get the mission done -- reviewing decisions and granting my stamp of approval."

Term in the Senate

Perhaps one reason for Mr. Jepsen's leadership by delegation lies in the amount of credit union experience he had before President Reagan appointed him to NCUA board chairman in 1985 -- none.

The last job Mr. Jepsen held was U.S. senator from Iowa, from 1979 to 1985.

Mr. Jepsen inherited an agency some say was in turmoil. His predecessor, Edgar Callahan, created a new regulatory landscape by recapitalizing the National Credit Union Share Insurance Fund and expanding field-of-membership regulations.

He also slashed the agency's budget and the number of examiners and staffers to the point where some said the NCUA was rendered ineffective.

Staff Built Up

From the start Mr. Jepsen increased staff. In 1986 the agency's board voted to add 205 examiners over two years. The agency spent more on training, and to increase the examiners' efficiency, and technology was upgraded from "pencil and eraser to laptop computers tied to a mainframe" in 1987.

"We led the way in that," Mr. Jepsen said. "Other agencies had introduced technology to a degree. We did it completely."

This remodeling was what the NCUA needed, said Herbert Yolles, the agency's controller. "He picked the agency up and gave it what it needed to be an effective regulator," he said.

Fewer Failures

Mr. Yolles notes the decline of deposits held by problem-case credit unions and the decrease of failures in recent years under Mr. Jepsen. The number of deposits held by problem credit unions total 2.4%, the lowest since 1977.

Charles Filson, president of the consulting firm Callahan & Associates and NCUA director of examination and insurance under Mr. Callahan, denies the charge leveled by many NCUA officials that Mr. Callahan had gutted the agency.

"It's nonsense to say it [the NCUA] wasn't an efficient regulator," he said. "There's a tendency in government agencies to measure their status by the size of their staff and their budgets. It's nature of the beast."

Despite the expenditures, the NCUA was caught off guard when Franklin Community Federal Credit Union went under in 1988. The low-income credit union listed about $2 million in assets when it failed, but manager Lawrence E. King Jr. and some associates had accepted about $40 million in unrecorded funds from depositors.

The insurance fund suffered a record $38 million hit from the failure, but the fund wasn't threatened.

In the years that followed the Franklin disaster, Mr. Jepsen stressed safety and soundness even though credit union managers grumbled.

A 1992 survey by the Credit Union National Association found that 70% of federally insured credit unions said examinations were tougher. And many credit unions felt they were being micromanaged by NCUA examiners.

"Examiners were overzealous in putting limitations on the ability of credit unions to make loans based on character," said Perry Dawson, president of Suncoast Teachers Federal Credit Union. "They wanted us to verify the employment of members, the income of members whether or not we knew that person for 15 or 20 years. They wanted us to verify everything."

Mr. Dawson added that the agency has moved to encourage loans in recent months due to appeals from the industry, and he applauds that decision.

Rep. Jim Leach, R-Iowa, a member of the House Banking Committee, said it was the Jepsen administration's tough policies that gave Congress reason not to intervene.

"He insured the independence of the system by upgrading standards so that the industry wasn't in danger of becoming a liability to taxpayers and so the industry operated with standards more comparable to thrifts and banks."

Disaster in Rhode Island

The collapse of the Rhode Island state insurance fund in 1990, also largely through fraud, caused another panic in the credit union industry. The NCUA had no obligation to guarantee the deposits of the credit unions there, but went in to help sort out the mess.

"Our role was one of a professional coordinator coming in at the request of the government to lend the professional expertise we had and offer guidance in rectifying the problems they had," Mr. Jepsen said.

Rhode Island Gov. Bruce G. Sundlun closed 35 credit unions and the NCUA agreed to insure 22 of the remaining ones, although some wanted the agency to do more.

Federal Insurance

The agency went on to convert credit unions in other states, notably Texas, to federal insurance.

Despite these scares, the industry as a whole grew during the Jepsen years. In 1985 credit unions had about 51.7 million members with assets of $137.2 billion; at yearend 1992, 64.7 million people belonged to credit unions and assets stood at $271.4 billion.

"It used to be that credit unions were seen as the poor second cousin to banks," Mr. Jepsen said. "Suddenly credit unions are thought of as severe competition. That's a compliment."

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