Virginia Credit Union, Inc., California Credit Union League Back SEC Broker-Dealer Exemption Proposal

WASHINGTON – The California Credit Union League and Virginia Credit Union Inc. are among the latest to throw their support behind the SEC’s proposal to extend broker/dealer exemptions to credit unions. Beverley Rutherford, VCUL Vice President/Compliance recently wrote the three exemptions of note to credit unions – networking arrangements with broker-dealers; sweep accounts; and acting as a trustee or fiduciary – will allow members access to “a wide range of financial services at a reasonable cost, and compete with banks and thrifts who do have this exception.” “All credit unions are subject to examination by their regulator, who monitors the credit union’s safety and soundness, and will initiate prompt corrective action if necessary,” Rutherford said. “In addition, the broker-dealer is heavily regulated and is obligated to understand the credit union and the extent of their capabilities in participating in these arrangements.” Meanwhile, the California Credit Union League supports all of the exemptions and emphasized that they should be extended “to all credit unions, regardless of charter or type of share insurance,” wrote David Chatfield CCUL president/CEO.”Like banks, credit unions should be given additional authority to perform safekeeping and custody services without meeting the “broker” requirements,” Chatfield said. “(Credit) unions are emerging as major locally controlled financial institutions in many California and Nevada communities. They will be called upon in a short period of time to provide these services as the local community banks are sold to non-local large banks.”Chatfield said there are a number of credit unions that already perform these services in conjunction with consumer loans made using securities as collateral. “These credit unions have created and maintained safeguards for the certificates held that are owned by their member-owners,” Chatfield said. “The League is not aware of any credit union members who have incurred losses because their credit union held onto stock certificates or other securities.” America’s Community Bankers wrote a 17-page letter to the SEC expressing its main concern that Regulation B treat savings associations and savings banks on parity with commercial banks with the exemptions, wrote Charlotte Bahin, ACB senior vice president, regulatory affairs. [email protected]