- The Washington Times - Monday, July 2, 2001

With every passing day Dennis Dollar hopes he's closer to being the permanent chairman of the National Credit Union Administration (NCUA).

President Bush appointed him in February to lead the board that regulates all federally chartered credit unions and administers the federal insurance fund for more than 11,000 credit unions nationwide.

Since then Mr. Dollar has had the power to reform the NCUA as he sees fit.

"I can either sit back and bide my time," he says, "or I can hit the ground running and prove that I can be consistent with this agency and the Bush administration."

His version of going along with the Republican agenda comes in the form of Reg-Flex, a proposed pro-business rule that would "maintain safety and soundness but also allow for flexibility" at credit unions and make them run more like banks than nonprofits.

"One of the things I wanted to see this agency do is something that I think President Bush wants from a number of the federal agencies, and that is to be more reasonable about regulation," says Mr. Dollar, 47.

"There was an attempt by the previous administration of NCUA to focus on documentation programs … and credit unions felt very restricted in terms of innovation."

Reg-Flex, which stands for regulatory-flexibility, "in a nut shell [seeks] to provide earned regulatory flexibility for credit unions with high capital levels and solid management performance," says Mr. Dollar, who was recommended to serve on the NCUA board in 1997 by now Senate Minority Leader Trent Lott.

It would allow qualifying credit unions to buy loans from each other, which they can't do now. It would also allow the institutions to set their own limits on fixed assets, such as updating technology or opening new branches. Under the existing rules, credit unions have set caps on fixed assets, making it nearly impossible for them to grow and enter new markets.

Reg-Flex would also enable credit unions to donate money to charities as they see fit, without having to go through the NCUA, which is what they have to do now.

Mr. Dollar pitched the idea for Reg-Flex when he first joined the NCUA board, but the previous chairman, Norman E. D'Amours, a Clinton appointee, was against the idea.

Credit unions account for about 3 percent of the nation's deposit base through nearly 80 million customers. They perform the same basic services as banks. But because they are nonprofit, they usually charge fewer fees for services and smaller interest rates on loans.

Credit unions are not as accessible as banks, and their technology is older because they don't have the same resources as banks to keep updating.

For instance, out of 10,538 credit unions, only a third have Web sites, and only 1,458 offer online banking, according to Callahan & Associates, a D.C. firm that tracks the institutions.

"Credit unions operate in an increasingly commercial manner," says Bert Ely, a local banking analyst with Ely & Co. "The distinction between credit unions and banks is not as strong as it was let's say 20 years ago."

Under Reg-Flex, credit unions would be able to compete even more closely with banks. Mr. Dollar estimates that some 3,900 of the nation's 7,000 federal credit unions would qualify for Reg-Flex exemptions.

If approved, the rule would kick in later this year. Currently, the NCUA is responding to letters it received during the public comment period, which recently closed, Mr. Dollar says.

The proposed rule has been widely accepted. Even the American Bankers Association (ABA), which traditionally opposes anything allowing credit unions to compete more closely with banks, has expressed support for it. The ABA hopes the Office of the Comptroller of the Currency, the federal regulator supervising banks, will pass similar legislation that would allow banks to increase their lending limits.

Mr. Dollar will serve as acting chairman on NCUA's committee until his six-year term ends in 2003 even if he's not given the position permanently.

For now he's working out of a roomy office facing the King Street Metro station in Alexandria, with a view of the George Washington Masonic Temple. His surroundings are comfortable and fitting, with a collection of Republican memorabilia adorning one of the walls near his desk.

Mr. Dollar's first encounter with credit unions was in 1992, when he became president and chief executive officer of Gulfport VA Federal Credit Union of Gulfport, Miss., which now has some $32 million in assets.

While holding that five-year post, Mr. Dollar recalls annually dealing with NCUA examiners who said they were applying regulations to his credit union that they realized shouldn't have applied to it.

The Credit Union National Association (CUNA), the trade group for the financial entities, is in favor of Reg-Flex, as well as Mr. Dollar's permanent appointment as chairman of NCUA.

"We want to have a good, solid safety and soundness regulation, but we also want to get away from mandates," says Daniel Mica, president of CUNA. "We see Dennis as a facilitator of innovation, and that's helpful."

The first native of Mississippi to ever serve on the NCUA's board, Mr. Dollar was until recently the only Republican member on the three-person board since his appointment in 1997.

He first tried coming to Washington as member of Congress representing his home state. He ran for the House in 1996, but lost to Rep. Gene Taylor, the Democratic incumbent.

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