EL SEGUNDO, Calif.-Though the federal charter is not perfect, and California's progressive regulatory style has lured a number of credit unions to a state charter, Xerox Federal Credit Union CEO Bill Cheney, said he is content to work to improve it. "We felt that with branches in eight states and members across the country that for our credit union, the federal charter provided better regulatory flexibility for us and we can also take advantage of the federal preemption," Cheney, NAFCU's board secretary, explained. He added that the majority of the membership is outside of California and relies heavily on electronic services. Cheney recently testified on behalf of NAFCU to the Senate Banking Committee on necessary regulatory relief for federal credit unions. He explained that one of the most helpful provisions from the Financial Services Regulatory Relief Act (H.R. 1375) in the House and the Credit Union Regulatory Improvements Act (H.R. 3579) would permit multiple common bond credit unions that convert to a community charter to maintain their select employee groups. Though Xerox is still Xerox FCU's primary sponsor, the credit union has added a number of SEGs, Cheney explained. With the legislative change, Xerox FCU could choose one of the communities it currently serves for its charter while continuing to serve all the remaining SEGs. Other provisions in the legislation that would be helpful to Xerox FCU would raise the loan maturity limits, expand permitted CUSO investment, and broaden investments Still, the credit union has been able to expand in other ways. It recently added four underserved areas in Rochester, N.Y., Dallas, St. Petersburg, Fla., and Chicago. Cheney explained that there were really two reasons Xerox FCU decided to expand into these areas: "A combination of diversification of our field of membership as well as just having the ability to reach out and serve the community in those markets." "It's something that Xerox has been very supportive of," he added. "They're what I would call a caring organization, try to be a good corporate citizen, so they've been very supportive of our efforts to reach out and help people in those communities." The credit union is going to continue to try to expand within its existing markets for now. As far as the bankers are concerned in credit unions' pursuit of regulatory relief, Cheney said credit unions have to do what they have to do. "They're not going to support anything that we want to do so I expect to hear them oppose what we want to propose," he said. "I don't like the fact that they're going to oppose it but at the same time, we have to do what's right for credit unions." Beyond the items in CURIA and reg relief, Cheney said he is unsure whether alternative capital will still be necessary for credit unions. The risk-based capital system in CURIA may serve as a short- or long-term solution. "Secondary capital is something that needs to be addressed, but it's something that needs to be done in a way that doesn't jeopardize the structure of credit unions," Cheney stated. "So I think there are going to be reasonable approaches to that, but I think it's something that's going to take a longer period of time. I think it's important to get risk-based capital done and then talk about what some reasonable approaches to secondary capital might be." Congressman Brad Sherman (D-Calif.) has said he may introduce legislation on secondary capital for credit unions and has directed the General Accounting Office to complete a study on it. Cheney commented that it is very helpful to have someone like Sherman, who is a CPA and a lawyer, and "really understands these issues." It is very important to Cheney not to alter credit unions' structure, which is why he has stayed with credit unions through nearly his entire career. "I think it's a unique environment for business in the whole member-owned, cooperative structure at the credit union. The opportunity to, it sounds a little corny but, the opportunity to help people out and make a difference in people's lives," he said. "You answer to a board of directors and you answer to the membership but you don't have to answer to shareholders, Wall Street, et cetera. You can be focused in our business on the member. We don't have the serving two masters quandary here, that a bank would have, for example." As a finance major in college, banking made sense, Cheney said, "Credit unions just seemed to me like a better way to do that." One of the ways his credit union helps its members is through financial education. Through its broker-dealer XCU Capital, now owned by 17 credit unions, the credit union offers Xerox employees financial planning seminars, particularly on retirement savings. Xerox FCU also holds Camp XFCU for its younger members where they learn about the credit unions and financial responsibility in a fun environment with prizes and food. The credit union is also very active in the local schools; they are very interested in attracting younger members. Prior to working at Xerox FCU, Cheney was a consultant with Arthur Andersen for five years and was offered a job at Security Service FCU in Texas while he was implementing a data processing system he had recommended while consulting for them. Once the system was implemented he rose from senior vice president and chief information officer to executive vice president. He served at Security Service for 10 years. Outside of work, Cheney does a lot of volunteering. He is an assistant Boy Scout master for his son's troop, serves on the board of the American Red Cross of Greater Los Angeles, and is involved with Heal the Bay. He also likes golfing, fishing, skiing and hiking. [email protected]