To the Editor:

John D. Garrison misses the point about credit unions on a number of levels in his recent Viewpoint article in the Banker ["Congress, States Should Stop Risky Moves by Credit Unions," page 17, Sept. 15]. I'll focus on two key issues here to illustrate Mr. Garrison's poor marksmanship.

First, the passage of the Credit Union Membership Access Act, or HR 1151, in 1998 was necessitated by a Supreme Court decision that year. The court upheld an appeals court decision that the National Credit Union Administration was exceeding its authority in approving multiple employer groups for membership in credit unions. This act of Congress (passed overwhelmingly), in effect, overturned the Supreme Court decision and allowed credit unions to go back to what they had been doing for more than a decade: allowing groups from small employers to join existing credit unions.

Perhaps more importantly, HR 1151 ensured that those credit unions would not have to kick out of membership 20 million consumers who had already joined.

In short, the law (described by Mr. Garrison as "a great victory over the banks") merely restored powers that credit unions lost in the court decision.

In no way did the law liberalize credit union membership rules or otherwise grant credit unions new powers. Second, the impetus for a federal credit union to seek conversion to a state charter has more to do with the charter itself. As I have already noted, legislation passed in 1998 provided no new powers - it only restored former powers and clarified existing ones. For the most part, the Federal Credit Union Act has been changed only incrementally since it was enacted in 1934.

States, on the other hand, have proven to be much more nimble in keeping their credit union laws up to date and reflective of modern times. Credit unions looking for more effective and comprehensive ways to serve their members (who, as member owners, drive the credit union to take action) recognize that. For some of them, changing charters from federal to state is the answer.

The Credit Union National Association, as well, recognizes that credit unions are looking for better ways to serve their member-owners. Our members, both federal- and state-chartered credit unions nationwide, have urged us to look at what can be done to enhance the value of state and federal charters. To that end, CUNA has established the Renaissance Commission, a blue-ribbon panel made up of credit union representatives from across the nation which will explore and recommend to CUNA options for preserving the viability of federal and state charters.

Mr. Garrison, in our view, has also overstated the "grave concern" that community banks have over the issue of credit unions. The data indicate otherwise. According to a survey released last week by the Independent Community Bankers of America, the question of how concerned community banks are about competition from "nonbank sources" gets answers that are schizophrenic.

Of the 1,600 bankers who replied to the survey, 10% said such competition was "the most important issue." At the same time, 10% ranked it dead last in importance. Sounds like a wash to us.

We argue that the dual chartering system has made the credit union system strong and will continue to do so, creating a balance of options for credit unions and their members.

We suspect that the dual chartering system for banks has been good to Mr. Garrison's bank and thousands of others around the nation. Would he argue just as vociferously against the bank dual chartering system? It's doubtful.

Daniel A. Mica
President and CEO
Credit Union National Association

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