To the Editor:

In his Jan. 8 Viewpoint, "A Better Charter Alternative for Credit Unions", Alan D. Theriault recommends rules that more aggressively promote the conversion of credit unions to banks, citing capital pressures as the reason. But his call for credit unions to give up their charter flies in the face of today's economic realities and public sentiment.

First I would note the "free movement from charter to charter" that Mr. Theriault advocates for credit unions already exists. The National Credit Union Administration's rules already allow credit unions to convent to mutual savings banks, provided clear and adequate disclosures are made to the credit unions' members, which is only fitting since credit unions are owned by their members and it is ultimately the members' decision. Relatively few of the nation's 8,000 credit unions have opted to convert their charter, however, particularly in recent years.

The reasons are clear. Even as the economic downturn has ground on, credit unions' average capital-to-asset ratio is still 10 percent, a number many banks would envy. (Mr. Theriault's characterization of credit union capital as "decimated" is simply preposterous.) Moreover, credit unions are handling the costs of stabilizing the wholesale, or "corporate" credit union system on their own. No government bailouts needed.

Mr. Theriault's advocacy of a bank charter in these times amounts to swimming against the tide. Credit union loan delinquencies and charge-offs compare far more favorably to banks. Bank insurance premiums are set to rise at a much steeper clip. CUNA's annual 2009 voter (consumer) survey for the first time found more consumers identify the term "financially safe and sound" with credit unions than with banks. And public disgust over banks' role in the financial crisis is contributing to the fastest membership growth credit unions have seen in nearly a decade, with about 2 million new members added last year. Indeed visits to the credit union locator tool on our consumer web site,, spiked more than 300% above average the day after I mentioned it in a blog post on the Huffington Post's "Move Your Money" web site, and it jumped more than 200% after a CNN report the previous week on how credit unions compare to banks.

In this environment, credit unions are looking to enhance their charter, not run from it. We believe policy makers should do the same by supporting measures that would further strengthen the charter, including alternative capital sources. The alternative capital legislation our association seeks would allow credit unions to further bolster their capital position, in a manner fully consistent with credit unions' structure as not-for-profit, member-owned cooperatives. Adding this authority would augment a charter that already stands as the best option for the nation's consumers.

Daniel A. Mica
President and CEO
Credit Union National Association
Washington, DC

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