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News Now

Washington
CU CEO proposes total charter revamp
WASHINGTON (6/12/09)—Wendell “Bucky” Sebastian, CEO of Tampa, Fla.-based GTE FCU, proposed a radical reinvention of the current credit union system at the National Credit Union Administration’s symposium highlighting the 75th anniversary of the 1934 Federal Credit Union Act. Under Sebastian’s concept, credit unions would change their title to financial services cooperatives. These financial cooperatives would continue to have voluntary directors and would hold direct elections. Organizations would be allowed to choose their own markets and determine which types of loans they wish to provide to their members. Supplemental and alternative capital would also be allowed. Fields of membership would not be determined by third parties, but by the cooperative’s board of directors. The compensation for CEOs would be capped at 20 times the salary of an average employee of the cooperative, and the salaries of CEOs and high-ranking executives would be published for public record purposes. These organizations would be taxed on earnings in excess of expenses, dividends, and any reserves beyond 12 % of their total assets, but would, like many other financial organizations, “be subject to taxation but pay no tax.” Community reinvestment act reporting rules would also be enforced. Oversight of these organizations would still be performed by the National Credit Union Administration. However, the name could be changed to the National Cooperative Regulatory Agency. Sebastian advocated maintaining the existing credit union charter for those that are satisfied with the current results for their organizations and members. However, he said, many existing credit unions would benefit from a new model that would still provide “first class, open, transparent, absent-of-greed financial institutions that are working in the best interest of their members and never in the interest of a third party group different from their members.”


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