To the Editor:

As a regular reader of Paul Nadler's column, I am well aware of the work he has done with credit union groups and appreciate his generous comments about the credit union people he has met at various conferences. It surprised me, then, to see him display in his Aug. 17 column ("It's Hard to Tell Banks from Credit Unions, Until You Do the Taxes," page 6) a fundamental misunderstanding of what makes credit unions different from banks.

Mr. Nadler wrote that, over time, credit unions have changed and that it is difficult for him to distinguish now between credit unions and banks. While I can't disagree that credit unions are no longer unsophisticated -- they have evolved to meet the needs of changing, increasingly sophisticated members -- one thing has never changed: Credit unions are not-for-profit cooperatives and exist solely to serve their members.

The difference from banks lies in ownership structure, not size, makeup of membership, or products and services offered. An effective way to look at the differences between banks and credit unions is to look at what a bank would have to do to become a credit union, including:

Eliminate stockholders.

Turn ownership over to depositors.

Return all excess income to customers in the form of better rates and fees.

Give each depositor an equal vote, regardless of balance.

Eliminate the paid board of directors and allow members to directly elect the board.

Give up lucrative stock options for management.

Make loans only to depositors.

Give up significant investment and loan-making freedom.

To date, I am not aware of any bank that felt making these changes was in its interest. Obviously, bankers understand there is a difference between themselves and credit unions.

In the future, I expect credit unions will continue to evolve to meet the demands of their member/owners. That is their distinct mission. But their not-for-profit, cooperative structure will remain constant.

Daniel A. Mica

President and chief executive officer,

Credit Union National Association

Madison, Wis.

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