In light of the unfolding Enron, Global Crossing and Computer Associates debacles, it would appear that various aspects of credit unions' governance structure might provide a useful model for forging corporate governance reforms. This is not to say that in the case of "for profit" corporations such aspects can be adopted "as is", but rather that they might be adapted in such a way as to provide meaningful "safeguards" for corporate constituents. Thanks to NCUA By-laws, the governance structure of credit unions is a model of checks and balances perhaps second only to the U.S. Constitution. A bold statement? Admittedly, but with some justification. Let's look at some of the more notable aspects. Separation of Directors from Management: Beyond the fact of volunteer directorship, no credit union committee member (e.g., Supervisory, Credit, Nominating, etc.) can be a paid employee of the credit union. Moreover, while one or more management officials may be non-Director members of the Board, they may neither constitute a majority of the Board nor serve as Board chair. This latter point is a key one in that it separates the top governance office (i.e., Board Chair) from the top management office (i.e., Chief Executive Office). Nomination of Directors: The nomination of Directors, via a Nominating Committee appointed by the Board Chair, is under control of the Board rather than management. In fact, in many cases the Nominating Committee has volunteer members drawn directly from the membership. Moreover, a process exists for Director nominations via direct petition. Suspension of Directors: Another key check and balance exists between the Board and the Supervisory Committee in that each has the ability to suspend members of the other. Fiduciary Safeguards: Fiduciary safeguards exist in the form of a check and balance between the Board and Supervisory Committee as it applies to the auditing function. While the Board is responsible funding both external and internal auditing functions, the Supervisory Committee, which is made up of all or a majority of non-Director volunteers, is responsible for auditing engagements and the oversight of such functions. Moreover, the Supervisory Committee has direct access to the membership via its ability to call special meetings of the membership with regard to any violation of the Credit Union Act, regulations or by-laws or any practice it deems unsafe or unauthorized. Clear Conflict of Interest Standards: All Directors, committee members, officers, agents and employees are prohibited from deliberation upon or determination of any question affecting their personal and/or direct or indirect pecuniary interests. Furthermore, disclosure of such interests is not just the personal responsibility of the "interested" party, but also a collective one whereby others have a responsibility to raise the issue of another's "disqualification" should there be some question regarding a possible conflict. While admittedly the governance structure of credit unions is not perfect, there appears much that public policymakers might find of value as a basis for crafting corporate reforms. Additionally, the ongoing investigations regarding corporate governance lapses should also serve to focus our attention on strengthening credit union governance. It would seem we could take a chapter from Steven Covey's book "Seven Habits of Highly Effective People", namely habit seven, "Sharpen The Saw". Given that governance is a process, it lends itself to techniques of continual process improvement. Thus, to the extent individual CUs continue to "sharpen the governance saw", they benefit not only themselves and the credit union movement but also serve as a positive model with other public audiences. Michael G. Clinton, CCD Director Affinity FCU Bedminster, N.J.