To the Editor:

Lawrence White in an Aug. 31 Viewpoint column ["State Credit Unions Shouldn't Have to Subsidize Federal," page 7] argues the National Credit Union Administration should abolish the overhead transfer rate and thus discontinue using the National Credit Union Share Insurance Fund to support its insurance-related examination costs. While some state-chartered credit unions undoubtedly would agree, many federally chartered credit unions would take strong exception to this proposal and Professor White's characterization of the overhead transfer as "one-sided."

CUNA, which represents both state and federal credit unions, believes Mr. White's recommendation would unnecessarily divide the credit union system when better solutions can be found that would bring credit unions together on this matter. In our view the current 66.75% rate is too high and was never sufficiently explained to credit unions. But rather than debating the proper level for the overhead transfer rate, CUNA would prefer to work with NCUA to develop a process for setting the rate that's fair to all federally insured credit unions.

We feel the key is for the NCUA board to ensure the agency has only included legitimate, substantiated insurance-related costs in its determination of the transfer rate. To that end the agency's retention of Deloitte Touche to examine its overhead transfer process was a very positive step. Equally important, NCUA's analysis should be fully communicated each year to credit unions before setting the transfer rate so that credit unions can have an opportunity to comment back to the agency. By clearly defining and explaining its "insurance-related" costs, NCUA will help us better determine whether it is properly allocating its resources and has set a realistic rate that is equitable for state and federal credit unions alike.

Daniel A. Mica President and
chief executive officer
Credit Union National
Association

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