Dedicated to the defense and promotion of the dual chartering system, NASCUS works to preserve the charter choice. The strength and health of the credit union system, both state and federal, rely on the preservation of the principles of the dual chartering system. Dual chartering gives credit unions the option to choose the charter that best fits the unique needs of its members. Also, it benefits the 48 state governmental and U.S. territorial agencies that charter, regulate and examine the nation's state-chartered credit unions by providing forums for regulatory, legislative and operational innovation. Dual chartering does more than just promote innovation, however. Preserving the principles of dual chartering is critical for the credit union system. Dual chartering provides an invaluable safety valve for the credit union system in its ability to allow credit unions to change charters between state and federal. Credit union boards of directors and CEOs have the ability to examine the qualities of each charter and determine which charter will best meet the goals of the credit union and its members. While there are many reasons why credit unions seek to change their charter or merge, it is clear that without dual chartering opportunities many might have left the credit union system entirely. Charter choice creates healthy competition and provides an incentive for regulators (both state and federal) to maximize efficiency in their examinations and reduce costs. It also allows regulators to take innovative approaches to regulation while maintaining high standards for safety and soundness. These examination efficiencies and innovative approaches in turn, once proven successful, spread throughout the system. The examples of innovative success in dual chartering are numerous. The National Credit Union Administration (NCUA) Member Business Lending (MBL) rules were inspired by the states that promulgated state specific MBL rules. What began as business lending relief for state credit unions in Texas, Washington, Wisconsin, Maryland, Connecticut, Missouri and Oregon evolved into business lending relief for all federally insured credit unions. That is dual chartering at work. Moreover, maintaining a strong, diverse dual chartering system allows for autonomy from state to state and between states and the federal government. Dual chartering also allows the system to work together on common challenges affecting the entire system and the continued strength and growth of credit unions. This year brings many challenges for credit unions -both state and federal. Following the November 2005 hearing of the House Ways and Means Committee, the credit union system is determining how best to document service to credit union members. The system is also ensuring that transparency, accountability and verifiability dictate the oversight of credit union operations. These are just several of the important matters credit unions are tackling this year. As issues play out in 2006, it may be tempting to view certain challenges as specific to one charter or the other. For example, the Government Accountability Office and Congress have prompted the NCUA to initiate a pilot data collection project to gather information on federal credit unions' service to members, especially those of modest means. Also, the state system is expecting the Internal Revenue Service to issue some direction on unrelated business income tax liability by mid-year. On the surface, these matters appear to affect only one charter. But there is a possibility that adverse implications to one charter could eventually spread to the other charter. More fundamentally, the credit union system's vibrancy depends on credit union choice between two dynamic and distinct charters. It is this point that moved the state system to aggressively support HR 1151 in the late 1990s to remedy federal field of membership problems, even though the legislation contained provisions detrimental to the state charter. Promoting diversity in the system to preserve strength in the dual chartering system was the most important factor in supporting HR 1151. NASCUS maintains this conviction today and is reminding the system that dual chartering is critical to the system's continued strength and health. Dual chartering ensures that the federal and state credit union systems challenge each other to constantly improve. The entire credit union system – regulators, credit unions, leagues, associations and members (consumers) – must continue to understand the importance of maintaining a viable and an effective dual chartering system. By providing an option, the dual chartering system keeps those voices within the system rather than losing them. NASCUS remains committed to preserving the dual chartering system and charter choice. A strong state and federal charter benefits the entire credit union system, and is critical to safety and soundness of today's credit unions.