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Continuing Cooperation, Preserving Dual Chartering and Promoting Innovation: Themes of First NASCUS State System Summit

State and federal regulators, state credit union and league executives and other supporters of the dual chartering system gather at the opening general session. (Photo by Don Milici)

“We look forward to continuing the NASCUS State System Summits,” said NASCUS President and CEO Mary Martha Fortney. “The 2006 Summit was an invaluable opportunity for dialogue on the substantive issues facing the system and in-person interaction among state and federal regulators, credit union executives, league representatives and state system leaders.”

“Be Different, Better, Brave and Cooperative”- State System Summit
At the event’s official State System Summit session on August 10, panelists provided insights from a regulator, credit union executive and consultant perspective on the main issues facing the state system.  

Diana Dykstra, president and CEO of San Francisco Fire Credit Union, passionately urged attendees to work together as a means of survival in today’s financial marketplace. She also reminded the audience that “credit unions are not each other’s competition” but partners for future successes. “Cooperation is the key to our survival,” said Dykstra. “If we don’t work together, we won’t survive.” Her message, “be different, better, brave and cooperative” was a focus of continued discussion throughout the session. 

Diana Dykstra answers audience questions during the State System Summit panel on August 10. (Photo by Don Milici)

Kirk Cuevas, principal at Dollar Associates and former National Credit Union Administration chief of staff to Dennis Dollar, also highlighted cooperation as a tool for state credit union success. He discussed high profile conversions and the importance of emphasizing the credit union difference. To continue state credit union success, Cuevas also pointed to capital modernization, enhancing the credit union charter, embracing the marketplace and a commitment to advocacy on Capitol Hill and in state legislatures. 

Stopping federal preemption and easing compliance requirements was the focus of Idaho Department of Finance Director Gavin Gee’s remarks during the Summit. “The problem with preemption is that it is broad in scope,” said Gee. “We must be proactive in fighting preemption; it does affect the state system in a harmful way.” He also emphasized that regulatory burden makes it increasingly difficult for smaller institutions to survive and that the state system must educate Congress and state legislatures about the consequences of additional compliance requirements.

Like Dykstra and Cuevas, Gee stressed the value of dual chartering. “The dual chartering system has served our country very well for a number of years,” said Gee. “It was genius of our founding fathers to develop a system of checks and balances. A system of checks and balances of regulatory power exists in dual chartering. It gives us the important option to change charter.”

New and Familiar Faces of FHLB System Encourage Credit Union Involvement
J. Timothy O’Neill, senior counsel for the House Financial Services Committee and former chair of the Federal Housing Finance Board (FHFB), and Geoff Bacino, newly confirmed FHFB member underlined the importance of credit union involvement in the Federal Home Loan Bank system at the NASCUS State System Summit.

George Bacino, newly confirmed FHFB member makes his first speech on August 12 to Summit attendees. (Photo by Don Milici)

The Summit was Bacino’s first speaking engagement as a new FHFB member. While only on the job for less than two weeks, Bacino is eager to discuss goals for his FHFB term. He emphasized the importance of promoting increased transparency in the system and keeping stakeholders aware of Board activities. “I have the same intent as I did as a NCUA Board member: to regulate in a safe and sound manner,” said Bacino on August 12.   

Like Bacino, O’Neill urged Summit attendees to be active in the FHLB system. O’Neill is the longest serving FHFB director and was appointed to chairman in 2001. In order to expand the role of credit unions in the FHLB system, O’Neill recommended credit union executives run for positions in the 12 FHLB districts. He also suggested that credit unions explore how to be active on the FHLB Housing Advisory Council.  

O’Neill also shared good news with Summit attendees about regulatory relief legislation in the 109^th Congress. He expressed confidence that a regulatory relief will be signed by the President. “Between the more expansive House bill and the narrower Senate bill, Senator Crapo said it would be somewhere in the middle, but probably more like the Senate bill,” said O’Neill on August 10.  

However, O’Neill’s news on the Credit Union Regulatory Improvements Act (CURIA) was less positive. “The good aspect of regulatory relief is that there is something for every subgroup of the financial services industry,” said O’Neill. “That is what is lacking in CURIA – but to get more than 100 co-sponsors is excellent, and it is always preferable to be on the offensive than sit back in a defensive crouch.” 

Post Sends Urgent Message About Implications of Plastic Card Fraud to Summit Attendees

CUNA Mutual President Jeff Post discusses plastic card fraud on August 12. (Photo by Don Milici)

CUNA Mutual Group President and CEO Jeff Post continues to travel around the country sending a critical message about the growing problem of plastic card fraud. He stopped at the NASCUS State System Summit on August 12, along with Marc Krasnick, senior vice

president of CUNA’s Mutual’s Credit Union Protection Group, to educate credit unions on protection measures and to ensure state regulators are up-to-date about potential risk. 

Post explained that the United States is one of only two countries that have not advanced their credit card technology to the next level, making US credit cards more vulnerable to fraud. “Those little pieces of plastic have not changed in 30 years,” said Post. “We need to insure that we solve the problem of plastic card fraud in the short-term and long-term. We need better technology to fight this problem.”

Post has met with VISA and MasterCard officials and state and federal legislators to bring awareness to the problem. He asks state regulators and credit unions to be proactive and ensure security measures are in place.

Krasnick walked attendees through security measures including 24/7 case monitoring, Card Verification Value Code (CVV/CVC) validation, proper claims and recovery documentation and ongoing education for employees and members. “If we can’t fix this problem, credit cards could be uninsurable,” said Krasnick. “But we can put protections in place to make sure this product stays available.”

NCUA Board Member and NASCUS Liaison Gigi Hyland Highlights Opportunities for Cooperation between State and Federal Regulators
At the NASCUS State System Summit, National Credit Union Administration (NCUA) Board member Gigi Hyland emphasized state and federal regulator cooperation as part of an open discussion with state regulators. 

On August 11, Hyland and state regulators discussed issues facing the state system including new NCUA policies regarding conversions and data collection. “Both federal and state regulators have a mission of assuring the safety and soundness of credit unions to ensure they grow into the future,” said Hyland. “We have much more in common than different.” In both presentations to state regulators and credit union executives, Hyland reiterated the importance of dual chartering as an “opportunity.”  

NCUA Board member and NASCUS liaison Gigi Hyland addresses state regulators on August 12. (Photo by Don Milici)

State regulators and Hyland also discussed the dual role of NCUA as a chartering authority and as the administrator of the National Credit Union Share Insurance Fund (NCUSIF). At the meeting, there was discussion about how to best define supervision and insurance. “NCUA and NASCUS are working together to get closer to where we need to be on this issue,” said Hyland. “There is opportunity for progress and an open door for continued dialogue.” 

“NASCUS was encouraged by Hyland’s dialogue at the Summit on the importance of dual chartering and the opportunity for continued progress that can be accomplished through regulator cooperation,” said NASCUS President and CEO Mary Martha Fortney. “We look forward to continuing to work with Hyland as our liaison and the NCUA staff on these important issues facing all credit unions.” 

Both the state credit union system and NCUA continue their efforts to document credit union service to members. Hyland reported that the NCUA collection efforts will be completed before the expiration of its Office of Management and Budget August 31 deadline. However, she said that no data has been analyzed at this time. State regulators will begin the collection of data on the state system by September.  

In Hyland’s presentation to Credit Union Advisory Council members, she urged attendees to comment on the recent NCUA changes to conversion policies. She also encouraged credit unions to pay close attention to information technology issues and focus on data security enforcement and education.

Additional Summit Presentations and Speakers Included:

·         Unique Strategies for Credit Union Growth
Mark Meyer, Director of Innovation, Filene Research Institute

·         Demonstrating the Fulfillment of the Credit Union Mission
Lucy Ito, Vice President, California Credit Union League

·         Emerging Technology Risks and Trends
Steve Williams, Cornerstone Advisors

·         Good Governance
Jim This, Partner, the Paragon Group

·         Taxation Battles Fought and Won at the State Level
Panelists: John Kozlowski, Ohio Credit Union League and Amy Kramer, New York Credit Union League

Look for more Summit News in the next issue of Stateline!