In that case I would think the fees would have to be applied. Senator BENNETT. Yes. Mr. ROGERS. It seems to me this is an area where the Administrator can work with the State supervisory agencies in upgrading perhaps their examination procedures. It would have a salutary effect. And I don't see it as a continuing problem. If this was done and this examination procedures were brought up to a point which would be acceptable to the Administrator, then the problem no longer exists. Senator BENNETT. Mr. Chairman, that is all, but I would like with your permission to ask Mr. Rogers if he would like to-well, to invite him to submit for the record the comments of his association on the proposals for change contained in the CUNA presentation. Senator PROXMIRE. I think that would be very helpful. There are a number of them-I think 30 he said-and if you would give us an item-by-item recommendation of your position of each of them, it would be very helpful. Mr. ROGERS. We would be very happy to do that. (The information referred to follows:) NATIONAL ASSOCIATION OF FEDERAL CREDIT UNION'S POSITION OF CUNA'S PROPOSED AMENDMENTS 1 CUNA'S PROPOSED AMENDMENT Sec. 201. (a) To insure member accounts in four unchartered credit unions overseas. To provide specific authority for the Administrator to insure accounts in overseas "sub-offices". Approval of types of accounts to be insured should be the responsibility of State agencies rather than the Administrator. Sec. 201. (b) & (c) Immediate insurance coverage for all Federal credit unions without application except those already in liquidation or against which liquidation proceedings have commenced. Recommends that each newly chartered Federal cerdit union be insured upon approval of charter. Approval of insurance coverage on a provisional basis for marginal credit unions for a period of not less than one year nor more than two years. Sec. 201. (a) NAFCU POSITION Disagree with CUNA. NAFCU feels that chartered credit unions only should be permitted insurance coverage. It appears that the S. 3822 provides insurance on these accounts. In disagreement with CUNA and feels that Administrator should approve type of accounts to be insured. Sec. 201. (b) & (c) In agreement. Agreement in principle with CUNA except that the duration of at least one year and not more than two years appears to extend over too long a period. 1 Prepared by M. A. Nestlerode, Treasurer, National Association of Federal Credit Unions. NATIONAL ASSOCIATION OF FEDERAL CREDIT UNION'S POSITION OF CUNA'S PROPOSED AMENDMENTS-Continued CUNA'S PROPOSED AMENDMENT Sec. 201. (b)(1) & (2) Administrator be required to utilize examinations of Federal Sredit unions presently made under the Federal Credit Union Act for purposes of insurance protection. To require the Administrator to utilize examinations of State-chartered credit unions performed by state regulatory agencies. Sec. 201 (b) (5) & (6) State-chartered credit unions be required to maintain such regular and special reserves as may be required by state law and not as the Administrator may require. Sec. 201(b) (7) To expand the type of accounts which may be insured to include deposits made by government agencies, corporations and other insured credit unions. Sec. 201(c)(1) (D) & (E) and Sec. 201 (c) (2) Proposes deletion from bill because whether the applicant is in fact a credit union or is for the convenience and needs of their members are more properly within the province of state regulatory agencies rather than the Administrator. Sec. 202 (a) (1) Recommend that the annual reporting requirement which now exists for Federal credit unions be amended to reflect information necessary for insurance purposes to eliminate additional reporting. The Administrator should be reqiured to utilize reports submitted by Statechartered credit unions to their regulatory agency. Sec. 202 (a) (3) Recommends the insertion of the word "willfully" between the words "which" and "fail" on line 12, page 6. NAFCU POSITION Sec. 201. (b)(1) & (2) In agreement with CUNA and strongly urges Committee's favorable consideration. We feel that the Administrator should not be required to use state regulatory agencies. NAFCU's recommnedation is that the words "to require the Administrator" be revised to "to permit the Administrator to a maximum utilization of examinations perform by state regulatory agencies". Sec. 201(b) (5) & (6) NAFCU disagrees strongly. The reserve requirements for all insured Statechartered credit unions should be at least equal to the reserve requirements of Federal credit unions. Sec. 201(b) (7) It is our opinion that this needs to be clarified to make sure that the insurance fund does not pre-empt the right of creditors. If it does, loans from other credit unions and other sources would be curtailed greatly even if the creditors could be sure that $20,000 of their money would be insured. Sec. 201(c) (1) (D) & (E) and Sec. 201 (c) (2) Disagrees with Cuna and feels that the Administrator should have this control over the insurance fund. Sec. 202 (a) (1) In agreement. No objection. Sec. 202 (a) (3) In agreement. NATIONAL ASSOCIATION OF FEDERAL CREDIT UNION'S POSITION OF CUNA'S PROPOSED AMENDMENTS-Continued NAFCU POSITION Sec. 202 (c) (2) NAFCU strongly disagrees with Cuna and feels that 1/20 of 1% premium would be insufficient to cover the possible losses and expenses of the insurance fund. We do, however, recommend that the committee consider favorably, the Aministration's recommendation that Sec. 202 (c) (4) and (h) (2) be amended to establish that the net operating level when applied to the Fund would be an amount equal to 1 per centum aggregate amount of members accounts in all insured credit unions rather than 2 per centum. Disagrees with Cuna-premiums should be an expense not a reduction of the reserve account. 47-444-70- -11 NATIONAL ASSOCIATION OF FEDERAL CREDIT UNION'S POSITION OF CUNA'S PROPOSED AMENDMENTS-Continued CUNA'S PROPOSED AMENDMENT Sec. 206. (h) (2) Recommends that the Administrator not have the authority to appoint new board members. Sec. 207. (a) (1) Cuna recommends that the Administrator be permitted to appoint a liquidating agent other than himself. Sec. 9. of S. 3822 Suggests that reserve requirements not be changed and the subject of reserves be deferred for study at this time. Sec. 8. (8) (D) of the Fed. C.U. Act To permit a Federal credit union to invest its funds in shares of another insured credit union. National Credit Union Board Recommends S. 3822 contain provisions spelling out role of the Board pertaining to Insurance Fund. Proposed an addendum amendment relating to guarantee to credit unions and others purchasing notes of liquidating credit union. NAFCU POSITION Sec. 206. (h) (2) In agreement. Sec. 207. (a) (1) NAFCU disagrees with the wording in the Bill and with Cuna. We recommend that the Administrator be the liquidating agent unless he appoints someone else. Sec. 9. of S. 3822 NAFCU disagrees with Cuna. The former Bureau of Federal Credit Unions made an extensive and expensive analysis of credit union reserves and reserve requirements in September 1968. Their analysis, findings and recommendations were published by the U.S. Government Printing Office under the title of "Regular Reserves of Federal Credit Unions". The reserve requirements as prescribed in S. 3822 agree with the findings of the study. However, so as to not increase the current requirements for any credit union (this would especially include very small credit unions) NAFCU recommends that line 6, 7 and 8, page 60, be amended to read "15 per centum of gross income or 20 per cent of net income whichever is the lesser until the regular reserve shall equal 5 per centum of the total of outstanding loans and risk assets, then". Sec. 8. (8) (D) of the Fed. C.U. Act In agreement. National Credit Union Board NAFCU agrees with Cuna provided that Board's powers are limited to Counsel and guidance. NAFCU does not wish to pass judgment on this proposal without further study. The NAFCU positions stated above are authorized by the Board of Directors of the National Association of Federal Credit Unions. Senator PROXMIRE. Yes? Mr. NESTLERODE. Mr. Chairman, if you please, I would like to add one comment that we did miss in this testimony that I think is rather important. The CUNA presentation asked that permission be given to the administrator to appoint a liquidating agent. The way the bill spells it out, the administrator shall be the liquidating agent. And they certainly have good cause to make this recommendation, having in mind all of the leagues that have their own stabilization funds and are handling liquidations right now. And the fact that we would permit an administrator to do it by law would not necessarily mean that he should not appoint himself as the liquidating agent, but it would give him the prerogative, and we recommend strongly that that be considered by the committee that he be given the prerogative to appoint liquidating agents other than himself. Senator BENNETT. I have no quarrel with that as long as he retains the right to appoint himself as the liquidating agent. I think I would have no objection to his having a broader right to select someone else to act under his direction and for him. I wouldn't want to put him in a position where he had to appoint in every case someone other than himself as a liquidating agent. Mr. NESTLERODE. Thank you very much. Senator PROXMIRE. Thank you very much, ladies and gentlemen. You have been most helpful to us. Senator BENNETT. I would like to thank the ladies for coming. We don't have such pleasant witnesses before the committee very often. You have brightened up the morning. Senator PROXMIRE. I agree wholeheartedly. We have a blonde and a brunette. Mrs. VACHON. Thank you, Mr. Chairman. Mrs. MATTHEWS. Thank you. Senator PROXMIRE. Our last witnesses are Mr. John McCarthy, president of Lockheed Georgia Employees' Federal Credit Union, and Mr. Jerry Anchors, chairman of the Legal and Legislative Committee, Lockheed Georgia Employees' Federal Credit Union, Marietta, Ga. STATEMENT OF JERRY K. ANCHORS, CHAIRMAN OF CREDIT COMMITTEE AND CHAIRMAN OF LEGISLATIVE COMMITTEE, CREDIT UNION BOARD OF DIRECTORS, LOCKHEED GEORGIA EMPLOYEES' FEDERAL CREDIT UNION Mr. ANCHORS. I am Mr. Anchors. Senator PROXMIRE. IS Mr. McCarthy here? Mr. ANCHORS. As I indicated to Mr. O'Neal of your staff earlier, Mr. McCarthy was unable to come this morning because of the pressure of his business. |