<p>WASHINGTON – Roger Little, the Deputy Commissioner for Credit Unions of the Michigan Office of Insurance and Financial Services, wants everyone to know that state-chartered credit unions are every bit as safe and sound as federally-chartered credit unions. Little, who is also vice chairman of NASCUS, came to the March 14 hearing before the Subcommittee on Financial Institutions and Consumer Credit prepared to reassure Representative Paul Kanjorski (D-Pa.) that state-chartered credit unions are as safe and sound as federally-chartered institutions, but he never got the chance. Kanjorski, a long time credit union ally, departed the hearing before Little had been allowed to testify. Kanjorski's remarks at the hearing seemed to hint that state-chartered institutions may not be as safe and sound when he questioned whether to allow privately-insured, state-chartered credit unions to join Federal Home Loan Banks on safety and soundness grounds. Those remarks followed his suggestion, at CUNA's GAC 2002, that state credit union authorities needed to be "rolled back" in order to maintain balance between the charters. Contacted in his office Kanjorski said he didn't want his comments to leave the impression that he questioned the safety and soundness of state- chartered credit unions overall. Rather, he said, "Whenever you tinker at the edges of legislation there are always unintended consequences, and I want to make sure we examine what impact allowing state-chartered, privately-insured credit unions to join federal home loan banks might have." "There is no way you can argue with someone's preconceptions," Little said, "but you can definitely let people know the facts of how well state-chartered credit unions have performed and continue to perform." Little refused to speculate on why or where Representative Kanjorski might have gotten the idea that state-chartered credit unions are unsound, but he pointed out that the data could address the current situation. Little reiterated the points he had prepared for the March 14 testimony, comparing state-chartered credit union and federally-chartered credit union performance. Nationwide, as of the end of 2001, capital ratios between state-chartered and federally-chartered credit unions are roughly the same, Little pointed out. The capital ratio of federal credit unions was 11.08% while the capital ratio of state-chartered, federally-insured credit unions was 10.74% and the capital ratio of state-chartered, non-federally insured institutions was 11.24%, he noted. Further the comparison of return-on-average assets (ROAA) was equally strong, 0.98% for both state- and federally-chartered credit unions and 1.19% for privately-insured, state-chartered credit unions, he said. Little also reiterated his March 14 comments in defense of both state and federal field of membership expansions, pointing out they serve to broaden and deepen credit union foundations, making the institutions even safer and more sound. "The recent expansion of fields of membership for both federal- and state-chartered credit unions has diversified geographical risks for many credit unions, enhancing the safety and soundness of these institutions," Little said. "Credit unions with more diversified membership bases are growing more rapidly than credit unions with narrow fields of membership, often tied to employees of a single or a few local employers, and this results in a stronger and safer system." Little called the practice of restricting a credit union's field of membership to one employer "an unsafe and unsound" chartering policy, adding, "It is amazing that so many of these limited membership financial institutions survived and thrived over the years of the Depression and World War II. Many of those that did survive succeeded because they were able to diversify their membership bases," he added. Little also shared data that showed similar strong trends in five key credit union states: California, Illinois, Michigan, Ohio and Alabama. NASCUS had ordered the NCUA data processed by Financial Information Systems (FIS), the heir to the former Ferguson and Company, in order to assure data accuracy and authority, according to Jonathan Lindley, NASCUS Vice President of National Advocacy. "This is NCUA data processed by a broad financial data and consulting firm," Lindley said, "so we have great confidence in this data," he added. Ferguson and Company was recognized as a strong authority in the processing of financial data and consulting services until the firm sold its product line to Sheshunoff Financial Services and Thomson Financial, according to Bill Ferguson, President of the firm. As part of the deal the firm agreed not to compete in the field for five years and not to use the name Ferguson and Company, Ferguson said. The five years is over and Ferguson has reinstated the firm as Financial Information Systems, he added. According to the data the average equity capital ratios in California between state- and federally-chartered credit unions are 9.93% for state-chartered and 10.02% for federally-chartered. In Illinois the averages were 11.09% for state-chartered and 11.19% for federal charters. Michigan state-chartered credit unions had an average equity ratio of 11.49% versus 12.46% in the state's federally-chartered institutions while Ohio state-chartered credit unions had an average equity ratio of 11.95% versus an average of 11.93% in that state's federally-chartered institutions. Alabama state-chartered credit unions averaged an equity ratio of 11.21% versus 11.86% among the state's federally chartered credit unions. Little maintained that these close comparisons are the tangible results of a state-chartered system that is safe and sound overall. Little repeated his assertion from March 14 that there have been major improvements of state systems of supervision and regulation of all depository institutions since the savings and loan debacle of the 1980′s and early 1990′s. "Since 1998, credit unions have been subject to PCA requirements that exceed those of commercial banks and savings institutions," Little said. Almost every state supervisor of credit unions utilizes the NCUA/AIRES examination platform to assure that all risks to the National Credit Union Share Insurance Fund are minimized, Little said. Additionally, the federal share insurance fund has the right to perform insurance examinations if any aspect of the financial performance of a federally insured state-chartered is questionable, Little pointed out.</p>