WEST PALM BEACH, Fla. – There's one adjective that can be used to describe the major trend on the CUSO scene this past year – multi-owned. CUSOs owned by multiple credit unions are continuing to increase in number and play a larger and more important role for one simple reason, experts say: economies of scale. Explaining the reason behind this trend, Callahan Executive Vice President Jay Johnson said multiple-owned CUSOs "are the most efficient way for credit unions to leverage their expertise and experience, and they allow the owners, regardless if they're large or small credit unions, to have access to the same technology of the CUSO." He also pointed out that multi-owned CUSOs also allow the credit unions to share in the expense and risk involved with running a CUSO. Callahan estimates there are around 130 multi-owned CUSOs formed under various business models and legal structures such as incorporated businesses and Limited Liability Corporations. As 2003 winds down, there's still no word from the Securities and Exchange Commission on whether it will extend the license exemption applied to CUSOs under the 1993 Chubb Securities Letter and allow CUSOs providing broker/dealer services to continue to receive commissions from the sale of mutual funds and other securities. CUSOs have been waiting for news on the SEC's decision for over a year now, but the agency seems to have more important items on its plate for now. Meanwhile, financial services CUSOs have been preparing for what many consider to be an inevitable announcement – it's not a question of will the SEC make the announcement, but when. Faced with the likelihood they will not be allowed to continue to earn the commissions unless the CUSO has its own broker/dealer license, which is an expensive and complicated proposition, many wholly-owned financial services CUSOs during the year took steps to roll their investment services back under their credit union's umbrella. But those naysayers who speculated that the expansion of credit unions' incidental powers signaled the diminished role of CUSOs only had to look at the NCUA Board's unanimous passage in September of amendments to the agency's member business lending regulation allowing CUSOs to originate member business loans to learn that CUSOs' role in the credit union industry is constantly evolving. -

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