WASHINGTON – An easing or restructuring of credit unions' capital requirements is the biggest regulatory hurdle facing credit unions, according to William Jackson III, economics professor at the University of North Carolina at Chapel Hill. Jackson has authored a study, The Future of Credit Unions: Public Policy Issues, for the Filene Research Institute. In the study Jackson concludes that the waves of deregulation that have washed over the financial services industry have not affected all financial institutions equally and that credit unions have, in general, come out with the short end of the deregulation stick. In addition to an easing of the limitations on credit unions' ability to raise capital, while remaining within a federally-insured system, Jackson also called on government at all levels to relax legislative limits on credit union membership and eliminate legislation and regulations that limit credit unions' consumer and member business lending. Meeting with the press about the study, Jackson characterized himself as being a fan of deregulation generally, but not of complete deregulation. He endorsed NCUA Chairman Dennis Dollar's approach to targeting deregulation according to the perceived risk of the different financial institutions and situations. He particularly praised Dollar's efforts to use deregulation, through the Access Across America Initiative, to encourage what he characterized as credit unions' "special efforts" to help lower-income members. "Optimal regulation should take into account the work of credit unions to make special efforts to meet the financial services needs of low- and moderate-income households," Jackson wrote. "Such efforts are not only consistent with the philosophical basis for the credit union movement, but also with current public policy." Jackson particularly cited credit union's field of membership regulations as being especially restrictive because they limit credit unions' ability to follow employment trends. "Hundreds of thousands of jobs exit our economy every week, and hundreds of thousands of new jobs are created to replace them," Jackson wrote. "In today's marketplace, restricting a credit union's ability to adjust the market segment it serves as the market changes is very costly regulation. This is why field of membership regulations credit unions face today must be changed." Jackson acknowledged that his study did not break down the credit union industry by type of charter, even though state charters are often seen as more active regulatory innovators than the NCUA. "I wanted to address these issues from a position as common to credit unions, generally, as I could," he said. He also pointed out that the current regulations on business lending encouraged a degree of dishonesty on the part of both the borrowers and the institutions. Credit union members would take out personal loans to essentially start up or expand a small business interest while the credit union would make the loan understanding that was the case, but the loan would not be classified as a member business loan. "Most small business loans credit unions make are really quite small for a financial institution, but quite large and important to the borrowers," Jackson said. [email protected]