News & Highlights

The CUSO Countdown: Reasons to Use a CUSO versus the Credit Union’s Incidental Powers

by Guy Messick

The reasons for using a CUSO are:

  1. A CUSO is still needed to legally provide some services. For example, if a credit union desires to provide non-depository trust services or to be engaged as an active mortgage broker, these services require powers that credit unions do not have and therefore the services must be through a CUSO. This is also true for a credit union that wants to be an active property and casualty insurance agency. If the goal is to have direct appointments from insurance carriers and actively sell insurance, this is not an activity that credit unions are empowered to do, so an active insurance agency must be a CUSO. Note that the credit union is permitted to enter into an agreement with an insurance agency for the sole purpose of referring business to the insurance agency. If the credit union had an insurance license or is otherwise permitted to receive commissions under state insurance laws, the insurance agency could send a portion of the commissions to the credit union as a referral commission. This situation would not require the credit union to be an active insurance agency.
  2. There is a desire to leverage the advantages of scale by having other credit unions join in a cooperative model. CUSOs are the model for cooperative arrangements among peer credit unions. If you intend to bring in other credit unions as partners in the delivery of a service, the CUSO model should be used. Note that a credit union has the option of providing services to other credit unions without the need of a CUSO but the other credit unions would not be able to have an ownership interest without a CUSO. Sometimes the ownership interest is a necessary strategic step to attract and retain key credit unions as customers of the CUSO. These cooperative arrangements can be very powerful tools to create economies of scale and economic power in the marketplace.
  3. There is a need to raise capital outside of the credit union. Credit unions are limited by regulation as to the amount of capital that it can invest in its CUSOs. By having multiple investors, credit unions may draw upon the capital of others. These other investors could be other credit unions or even non-credit unions. Caution should be taken with non-credit union investors as their goals, especially on the importance of the profit margin, may ultimately conflict with the credit union investors. Also note that senior officials of the credit union may not own CUSO shares under the conflict of interest prohibitions.
  4. There is a desire to build equity that the credit union can sell in whole or in part at a future time. A successful CUSO will generate equity growth, which can be sold in whole or in part as other investors buy in. This can be very profitable to the credit union, as many credit unions have happily learned.
  5. There is a desire to create a for-profit, entrepreneurial sales culture that can attract and retain a talented and creative staff and complement the credit union’s mission. There are only so many opportunities to advance within the credit union. A CUSO provides alternate and additional career paths to attract and retain quality staff. A for-profit CUSO can attract a sales oriented staff that can assist the credit union compete in the highly competitive financial services marketplace.
  6. The target market includes significant non-member business. A CUSO may serve non-members as long as the majority of its business is with members. If your target sales market includes non-member business, a CUSO should be used. Note that the property and casualty business could have persons or companies clients who cannot qualify for membership in the credit union. Since Incidental Powers does not permit the sharing of revenue for non-member business with a credit union, the revenue from the non-member business can only be realized in a CUSO.
  7. There is a desire to isolate liability away from the credit union. If the credit union has liability risk concerns for these ancillary services, a CUSO can help manage the risk outside of the credit union.

The reasons to use the credit union’s Incidental Powers are:

  1. The credit union wants to receive a referral fee for offering the alternative financial services to its members without it actually providing the alternative financial services. Incidental Powers permits a Finders Activity fee that is paid by a third party vendor to a credit union for access to its members. Incidental Powers do not empower credit unions with the ability to provide any expanded financial services. Note that credit unions may be required to obtain appropriate licenses to receive income for some services, e.g. insurance commissions.
  2. The credit union thinks that the integration of alternative financial products can be better achieved by having the services “in the credit union”. As separate entities, CUSOs where often a structural hindrance in achieving full integration of the alternative financial services with the traditional credit union financial services. The removal of the CUSO is regarded as a plus by many credit unions in their quest for full integration. It removes some psychological barriers.
  3. If the credit union desires to provide some services to other credit unions as customers but does not want to take on partners, there is no need for a CUSO.
  4. The credit union is comfortable with the risk management issues of running the services within the credit union.
  5. The credit union’s target market is overwhelmingly member only business.
  6. Forming and running a CUSO is a distraction that the credit union desires to avoid.


Denver, Co/Rocklin, CA. (September 12, 2007). Scott Jentz, President/Founder of Gateway Services Group,LLC (“GSG”) and Pete Snyder, President of Snyder Consulting Solutions, LLC, announced that GSG and SCS have entered into a strategic alliance to jointly and collaboratively provide credit unions with an expanded scope of services. GSG is the multi-credit union owned CUSO providing nationwide solutions for credit unions in investments and insurance and SCS is the consulting firm formed by Snyder in 2005. In addition to the announcement of the strategic alliance between GSG and SCS, there are active discussions taking place in conjunction with the acquisition of SCS by GSG.

 “As GSG has rapidly expanded the credit unions its serves and its array of solutions, we have been actively exploring strategies to offer consulting services to credit unions in our core areas of expertise. SCS and Pete’s nearly three decades of financial services experience will allow GSG to quickly provide this added scope of services that are very much in line with GSG’s vision and strategic focus,” Jentz noted. “The combined experience and skill sets within the GSG family of companies is already strong and diverse,” said Jentz, “ the addition of Pete and SCS to our GSG family of companies will provide credit unions with an unsurpassed resource for their investment, insurance, and consulting needs.”

The scope of services provided by GSG includes the full outsourced management of credit unions’ investment and insurance programs, sales coaching of individual employees, recruiting for investment and insurance resources, and business planning for the investment and insurance areas. SCS provides  comprehensive consulting services, with an emphasis on using a scorecard model to measure performance and productivity benchmarks and metrics for credit union retail investment and insurance programs.

As previously announced by SCS and Callahan & Associates earlier in 2007, the two firms have launched a joint initiative to bring the credit union industry its first ever credit union only annual retail investment services benchmarking study. With the alliance between SCS and GSG now in place, the SCS/Callahan benchmarking initiative will become part of the aggregate GSG family of companiesofferings to the credit union industry. This annual benchmarking data will provide credit unions with the tools to establishing performance standards for their retail investment programs.

“GSG is positioned to take credit union investment and insurance programs to the next level,” Jentz said. “We are credit union owned and believe in the power of the collaborative model. We are committed to continuing to focus on the needs of credit unions and their members. The alliance with SCS will be a great fit in our growth strategy.”

For further information about the alliance between GSG and SCS you can contact Scott Jentz at 720-260-3167 or Pete Snyder at 916-624-2161. Email addresses for Scott and Pete are:; and

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NCUA Vice-Chairman Hood Endorses CUSOs at NACUSO 2007 Annual Conference

Las Vegas, Nev. (May 28, 2007) – As part of their 2007 Annual Conference held at the Wynn Las Vegas Hotel, May 2, The National Association of Credit Union Service Organizations (NACUSO) conducted general sessions for attendees highlighted by keynote addresses from two compelling speakers, NCUA Vice-Chairman Rodney E. Hood and author Michael R. LeGault.  Throughout the four day conference, an enthusiastic membership was provided with informative content focusing on the core supporting pillars of NACUSO’s new National Center for Collaboration and Innovation.

NCUA Vice Chairman Rodney Hood
NCUA Vice Chairman Rodney Hood

To illuminate the importance of collaborative and cooperative
footing for NACUSO’s National Center and the industry
in general, NCUA Vice Chairman Rodney Hood, a strong
advocate of member business lending, endorsed CUSOs to
credit unions during his May 2 keynote address.  “It is because
of the change that is so constant in financial services, I totally
believe and support what you are doing as CUSOs, because
you truly are providing market-driven solutions to some of the
age-old industry challenges within the credit union system,”
Hood stated.  “CUSOs are indeed the primary vehicle by
which the credit unions are able to enter new markets.” 

“In fact, there are four specific activities I believe underscore successful CUSO performance:  Your sharing of know-how and experience, providing capital, spreading risk and scale for multiple participants, and consolidating common back-office needs of credit unions into one centralized location,” Hood continued.  “If we are going to be able to keep credit unions serving their member-owners, if they’re going to continue to remain viable, it is going to be incumbent upon them to work with CUSOs.”

Michael LeGault (L) and Tom Davis
Michael LeGault (L) and Tom Davis

Keynote speaker Michael R. LeGault, author of the 2006 book Think! Why Crucial Decisions Can’t Be Made in the Blink of an Eye, delivered the morning’s keynote address and took rapt attendees to the heart of the critical thinking pillar, the first core supporting element of NACUSO’s National Center.  “Our goal is to become expert thinkers that develop plausible theories to explain the world,” LeGault stated.  “Good thinking is the basis for our decisions, and the basis for our freedom; the American Revolution’s founding fathers knew this.”  He next immersed the NACUSO audience in a ‘History of Intuitive Hunches’ to demonstrate that the history of critical thinking is the overthrow of intuition, including such gems as ‘the world is flat’ and ‘washing hands before surgery is unnecessary.’  “Critical thinking is an evaluative process comprised of observation (investigation), logic or reasoning (interpretation), and skepticism (judgment),” LeGault explained.  “The missing link here is observation.  Become better observers, and never give up, because history shows us that the truth will win out.”
Lisa Renner, NACUSO board director and CEO of CU Holding Company, LLC, Lenexa, Kansas, opened the May 2 general session by demonstrating NACUSOMatch, a new Web-based networking tool supporting the National Center.  The NACUSOMatch directory and Web resource allows credit unions and CUSOs to search for solutions, partnerships and investment opportunities through NACUSO’s Web site, and facilitates the flow of information from existing CUSOs and third-parties to those “just thinking about it.”  Designed as a collaborative tool, NACUSOMatch allows credit unions, CUSOs, and other visitors to the Web site to easily search for and display credit union-owned solutions.  Future Web site enhancements include premium content areas that will provide NACUSO members with educational tools and information, such as Microsoft PowerPoint presentations, white papers, and case studies from industry leaders.

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Press Releases

PFCU & CUNJ Become Owners of East Coast Business Lenders – 5/15/07

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Redstone Federal Credit Union announces retirement of Gerald E. Toland as President and CEO – 5/11/07

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NACUSO Announces Board Election Results – 5/9/07

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NACUSO 2007 Annual Conference Launches National Center for Collaboration & Innovation – 5/3/07

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NACUSO 2007 Annual Conference Opens with Traditional CUSO 101 and Regulatory Updates – 5/3/07

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CO-OP Financial Services Tops List as Newest NACUSO Platinum Partner – 4/17/07

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Mortgage Center Reaches $1 Billion Milestone – 3/28/07

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NACUSO Opens Nominations for 2nd Annual CUSO Collaboration & Cooperation Award – 3/14/07

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NACUSO Hires Board Chairman and Industry Leader Tom Davis as New President/CEO

Newport Beach, Calif. (Feb. 23, 2007) – The National Association of Credit Union Service
Organizations (NACUSO) announced today that NACUSO chairman of the board Thomas C. Davis has accepted the position as NACUSO’s new president/CEO. Vic Pantea, president/COO of Member Gateways, LLC in South Bend, Indiana, served as NACUSO interim president while the NACUSO board searched for the best candidate to lead the organization’s new vision. Pantea will continue his responsibilities on the NACUSO board of directors, where he has served since 2003.

The transition for Davis, from NACUSO chairman to president and accepting the reins from Pantea, will be seamless and expedient as Davis has been a member of the board for twenty years, starting in that role two years after NACUSO was founded in 1985. A highly rated speaker at credit union and CUSO conferences, Davis spent seven years as a credit union and CUSO executive working with Bellco Credit Union. Over the last eighteen years he devoted his career to the industry as a management consultant and CEO of Davis & Company, while using his unique combination of educational achievements and applied expertise as a business strategist (MBA), industrial psychologist (PhD), and process consultant.

“The industry needs trade organizations committed to solving its major problems, and that requires industry expertise and commitment from the leadership. Tom has an in-depth understanding of NACUSO’s role in helping credit unions survive and succeed,” explained Dennis Pierce, CEO of CommunityAmerica Credit Union, Lenexa, Kansas, and NACUSO board vice chairman and CEO Search Committee Chairman for the new president. “He has been the primary architect of NACUSO’s new National Center for Collaboration and Innovation, a subject he is passionate about, and he’s done an incredible job of leading the board to his vision for the industry’s long-term success, thwarting tough industry issues, and NACUSO’s role in that vision.”

“I am honored by the Board’s selection and their confidence in me to lead NACUSO into the future, and to help the industry at a time when it is at a mature phase in its life cycle and facing significant challenges,” Davis stated. “NACUSO’s role in helping the credit union industry to transform itself is to focus not only on innovation, but to incorporate the unique qualities and advantages of collaboration and the cooperative business model. This approach will require the addition of critical thinking, a precursor to innovation, on the front end – and implementation, a requirement for transforming these activities into meaningful results and outcomes on the back end of the model .The mechanism by which the industry can embrace critical thinking, collaboration, innovation and implementation involves the establishment of a unifying structure that will help credit unions and CUSO to address the critical issues they are facing, create a sense of urgency to collaborate, and reinforce the belief that CUSOs are essential our survival. This mechanism is embodied in the National Center for Collaboration and Innovation.

NCUA Regulatory Review / SEC Exemptions for Credit Unions

To: NACUSO Members
From: Guy Messick
Re: SEC Exemptions for Credit Unions
Date: February 21, 2007

Ever since the passage of Gramm-Leach-Bliley Act, the SEC has been preparing regulations that codify the exemptions for banks to transact certain securities transactions and/or receive transaction based income without being registered as a broker/dealer. The proposed regulation was known as Reg B. Initially credit unions were not included in the proposed regulation but later credit unions were included. (more…)

NCUA Regulatory Review

To: NACUSO Members
From: Guy Messick, General Counsel
Re: NCUA Regulatory Review
Date: February 2, 2007

Every year, NCUA reviews one third of their regulations to see if any regulations should be modified or removed. Click here to view a copy of this year’s notice. It is also on the NCUA website at the following address:

Regulations under consideration that are of particular interest to NACUSO members are: (more…)

PSCU Financial Services Contributes $50,000 to Develop NACUSO's National Center for Collaboration and Innovation

Newport Beach, Calif. (Jan. 31, 2007) – The National Association of Credit Union Service Organizations (NACUSO) announced that PSCU Financial Services recently contributed $50,000 to fund NACUSO’s 2007 plans for their National Center for Collaboration and Innovation. The donation, delivered by NACUSO board member Dave Serlo, president of PSCU Financial Services, St. Petersburg, Fl, represents PSCU’s efforts to provide a portion of the start up “seed capital” exclusively for NACUSO’s National Center. “Our motivation at PSCU is truly to get the NACUSO National Center off the ground, and this contribution demonstrates the value we see in the concept and trust we have in the board,” said Serlo. “We see this as a solution to help reverse negative trends in the industry.”

“Dave Serlo, through the auspices of PSCU Financial Services, has enabled NACUSO to establish and geometrically grow relationships with other innovative organizations both inside and outside our industry,” said Tom Davis, NACUSO chairman of the board and president/CEO of Davis & Company, Highlands Ranch, CO. “This facilitates the National Center’s efforts to establish arrangements with a number of respected colleges and universities to develop innovative learning modules that will be offered at NACUSO conferences. I can speak for all NACUSO members in expressing our appreciation to Dave Serlo, for his professional support in helping to turn NACUSO’s vision for the future into a reality, and for enabling us to develop the substantive content and processes that will drive the National Center. I can ensure Dave and PSCU that their mustard seed will develop into a mighty oak.”

The $50,000 fund will support many of the initial NACUSO National Center for Collaboration and Innovation projects in 2007, including regional meetings focusing on key industry issues and the National Center’s four supporting pillars: critical thinking, collaboration/cooperation, innovation, and implementation. In addition, PSCU Financial Services’ contribution will help NACUSO develop the Web site as a clearinghouse for information and knowledge about all CUSOs – a
database of who is doing what in the industry. It will serve as a resource to credit unions and CUSOs searching for the right partner, products and services. “PSCU funding also allows NACUSO to create educational value for credit unions, through the development and distribution of case studies that will detail how CUSOs are helping credit unions successfully address specific operational challenges,” said Davis.

“Tom Davis has been very articulate in discussing the industry issues and NACUSO’s vision. We really believe what’s needed is that sense of urgency to begin turning the industry around. I get frustrated when I read about all of the credit unions that are no longer with us. So many things we do industry-wide are fragmented, so I really see the NACUSO National Center for Collaboration and Innovation being a hope for us, whereby some of the fragmentation can be replaced with more unity, or a common goal. It’s another way we can all work proactively. We’ve identified a few key players we believe will build the models to solve industry problems – NACUSO, Filene and Callahan’s – and we are pledging PSCU’s support to making a difference,” Serlo explained. “If there is a way to get more CUSOs and credit unions marching in the same direction very, very soon, then we can turn the industry’s life-cycle inflection point in a positive direction, and we won’t drift into an answer. We’ll get to the answer we choose.”

“We are elated by PSCU’s contribution to get the National Center off the ground and running. It confirms the validity of NACUSO’s new vision to deliver valuable collaborative mechanisms to the industry and NACUSO members, and we look forward to unveiling the National Center for Collaboration and Innovation to credit unions at our 2007 Annual Conference, April 30 through May 3, at the Wynn Las Vegas. We expect more than 400 industry thought leaders at the conference, and believe this is the perfect audience to introduce the National Center,” Davis added. “We are thankful and indebted to Dave Serlo and PSCU for their faith in the National Center’s mission and vision. We believe his leadership will encourage others to step forward and join together in innovative cooperative efforts.”

# # #

About PSCU Financial Services

As a non-profit cooperative, PSCU Financial Services is owned by more than 500 member credit unions representing over 10 million cardholder accounts and more than 400,000 online bill payment subscribers. Its Contact Center services more than 10 million inquiries a year.

PSCU Financial Services maintains its headquarters and Eastern operations center in
St. Petersburg, Florida. The company is also supported by a West Coast operations center based in Phoenix, Arizona. PSCU Financial Services is the nation’s largest Credit Union Service Organization CUSO).

Established in 1977, the company provides a broad array of cost-effective, high quality financial services that include credit, debit, ATM, prepaids, bill payment, lending and contact center solutions. PSCU Financial Services uniquely offers its members a full range of processing options, any combination from full service to in-house pass through processing for credit, debit and ATM transactions. As the leader in the credit union industry, the company offers gateway access to national and regional networks. It also provides full function ATM terminal driving services. For more information, visit the company’s Web site at


Formed in 1985, NACUSO is an association of credit unions and CUSOs dedicated to strengthening credit unions through the power of collaboration. NACUSO is an advocate and catalyst to educate, innovate and implement collaborative solutions that reduce operating costs, increase operating efficiencies, implement non-traditional financial services and increase non-interest income. For more information, visit

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Press Release: Kinecta Federal Credit Union Names Pete Snyder President Of Kinecta Financial Management Company, LLC – 1/5/07

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Press Release: CUSO Leaders’ Presentations Highlight NACUSO 2006 Business Services Collaborative – 11/29/06

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Press Release: NACUSO Chairman Tom Davis Announces National Center for Collaboration and Innovation – 11/17/06

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Press Release: NCUA’s Hood Gives Credit Unions and CUSOs High Marks for MBL Participation – 11/2/06

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Press Release: UNFCU Financial Advisors Incorporates Income Solutions Into Its Retirement Planning Platform – 6/5/06

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“Congratulations to our NACUSO members chosen as new i3 group members
by the Filene Institute for Credit Union Innovation.”

Advocacy Updates

Report on Advocacy Fund spending… NACUSO Working for You

Through the support of our members and partners, NACUSO raised approximately $273,000 in contributions toward its Advocacy Fund (and predecessor Legal & Litigation Fund) over the past 3 years.  The goal of the two funds together are to enable NACUSO to conduct crucial advocacy work on behalf of CUSOs and their credit union owners / partners.

In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars (we provided detail of how the funds were spent from 2014-2015 last year, which is also included in the attached Report), we would like to provide you with the following information, which was provided in detail to each contributor in the first quarter of 2017.  NACUSO spent the following amounts from the Advocacy funds during 2016:

$24,000     Dollar Associates, LLC - paid for advocacy work with Congress and NCUA on CUSO issues
$24,000     Messick & Lauer, P.C. - paid for advocacy work with NCUA and meetings with Congress on CUSO issues
$   718     Travel to Washington DC for meetings with Congress and NCUA
$48,718    Total amount spent influencing Congress and NCUA for favorable CUSO environment

The remaining funds, out of the total $273,000 in combined contributions, equal $110,323.  This represents the balance in Restricted Cash as of 12-31-16, as per the NACUSO Advocacy and Legal Fund Analysis report (click link below).

The NACUSO Board and its Legislative & Regulatory Advocacy Committee is continuing to prioritize the advocacy of a regulatory environment that is pro-CUSO and pro-collaboration within our industry.  NACUSO needs your support for this initiative and to accomplish its purposes.  While strategies may change over time based upon circumstances and opportunities to advance the cause of CUSOs, the necessity for funding of such initiatives is essential if NACUSO is going to remain in a position to impact the decision-making process for CUSOs and the credit unions that invest in, or utilize them.

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For a summary of how NACUSO has worked to maintain an environment that is supportive of collaborative investment, the following report entitled NACUSO Working For You (see below) provides a summary of the work we have done on your behalf.  To capsulize some of its key points, a summary of what we feel are the NACUSO “wins” this past year are:

  • Effectively opposing the costly extension of Vendor Authority to NCUA.
  • Worked with NCUA on the revised MBL Rule.
  • Advocating for the expansion of CUSO powers to originate loans credit unions are authorized to make, to help bring scale and expertise benefits to credit unions in all loan categories.
  • Encouraged NCUA to be transparent in its budget and rule making including the OTR calculation.
  • Working with NCUA to minimize adverse impact of the CUSO Registry and to correct the acknowledgements initially in the Registry.

To emphasize the last bullet above, initially, in its first version of the CUSO Registry documentation that CUSOs were required to submit with their data to NCUA in 2016, the agency’s acknowledgement form required CUSOs – when submitting their data – to accept responsibility under regulations that only apply to credit unions but were not intended to, apply to CUSOs.  These acknowledgments, if left unchallenged and signed by CUSO officials, could have exposed CUSOs to potential penalties under regulations that do not, and were never intended to apply to CUSOs.  Upon becoming aware of this inappropriate acknowledgement requirement, NACUSO worked directly with senior NCUA staff to bring our concerns to their attention.  NCUA agreed to the NACUSO position and made the needed changes to the acknowledgements for the CUSO Registry data submission process.  In addition, for those CUSOs who had already submitted their registration and signed the acknowledgements, NACUSO developed a letter with the appropriate wording for those CUSOs to send to NCUA to clarify this acknowledgement concern.

Effective advocacy requires ongoing diligence in following every aspect of regulatory requirements impacting CUSOs and the credit unions that invest in them and benefit from them.  It necessitates prompt response at times and the ongoing resources to interact positively on behalf of the CUSO community on issues and requirements of all types.  With a new Congress now in session, educating them on the benefits of credit unions and the collaborations that enable them to cost effectively serve their members, as well as invest in innovation, through CUSOs that help spread and minimize risk, is an important message we are delivering.  We hope that you agree such diligent advocacy initiatives are crucial to the long-term viability of the collaborative movements within the credit union community.

We hope this report helps you see how we have carefully managed the funds entrusted to us, for Advocacy purposes.  We would be happy to answer any questions that you may have.  Thank you for your support, and for giving NACUSO the opportunity to support you as you serve your members.  Please consider adding your support to our advocacy efforts by contributing today.

View NACUSO’s 2016-17 Advocacy Plan 

View NACUSO’s Advocacy & Legal Fund Analysis


Best Regards,

Jack M. Antonini
President & CEO

NACUSO Working For You

Legislative & Regulatory Advocacy Update

Vendor Authority

Knowing that obtaining vendor authority was the number one legislative issue for NCUA in 2015-16, Jack Antonini and Guy Messick met with key Congressional representatives in January to tell Congress why credit unions and CUSOs oppose the extension of this expansive, costly and unnecessary authority to NCUA.  When NCUA made their official request for vendor authority, Congress was not persuaded by their arguments.

We continue to monitor the situation to ensure that the Senate and House recognize that such an unwarranted extension of regulatory and examination authority beyond the current statutory mandate of NCUA is both controversial in the industry and potentially damaging to an industry that is dependent upon third party relationships because of their smaller size in comparison to many of their competitors.  Credit unions need third party support and collaborative innovation to continue to effectively meet their members’ needs, and a burdensome regulatory and examination regime for anyone who does business with a credit union will not foster that support and innovation.

NACUSO is focused on protecting credit union collaboration through CUSOs, but we need your help, so we can continue to be vigilant in monitoring legislation in Congress, please contribute to NACUSO’s Advocacy Fund today – click here to contribute.


NACUSO was supportive of the positive changes in NCUA’s revised MBL Rule, including the greater authority to waive personal guarantees, a more balanced approach to construction loan limitations, enhanced flexibility on counting loan participations against the MBL cap and the improved treatment of 1-4 dwelling rental property.  NACUSO also, in consultation with our business lending CUSO members, recognized that the Conflict of Interest provisions in the new MBL Rule could be misconstrued by examiners, so we have engaged with NCUA Board members and senior NCUA staff about the issue, and sent a letter to explain our concern and our recommended solution (see NACUSO’s MBL Conflict of Interest Letter to NCUA ).

Expansion of CUSO Authorized Powers

NACUSO wrote to the NCUA Board in 2015 requesting an amendment to NCUA Regulations Part 712.5 to add to the list of authorized CUSO powers to help facilitate a competitive solution to the growing Internet and peer-to-peer lending competitors for car loans and unsecured loans faced by credit unions in today’s environment (see NACUSO’s letter).  Chairman Matz responded that she was not opposed to reconsidering new authorities for CUSOs, indicating “if CUSOs can legally provide additional services to benefit credit unions and their members without compromising safety and soundness, I would strongly support those efforts.”  Chairman Matz went on to say that she had asked NCUA staff to review the policy and safety and soundness considerations relative to our request, and this review is already underway (see Chairman Matz response).

NACUSO has since asked the NCUA Board to consider updating the CUSO powers to align CUSO loan support with the loans credit unions are authorized to provide to their members  (see NACUSO’s 2017 Expansion of CUSO Authorized Powers Letter to NCUA), so CUSOs can bring scale, risk mitigation and expertise benefits to credit unions in all loan categories, not just those listed in the regulations.  While we explained the reasons for updating the NCUA Rules and Regulations Part 712.5 defining the permissible pre-approved activities a CUSO may provide, we also referred to our advocacy efforts to have auto loans and consumer loans added to the list of CUSO activities over the past two years, and the support that NCUA has communicated regarding those efforts.  We respectfully submit that now is the time to update the CUSO regulations to clarify that CUSOs are authorized to assist credit unions with any loan type that credit unions are authorized to make.

Update on CUSO Rule Implementation

Pursuant to the CUSO Rule the NCUA adopted in November 2013, CUSOs have been required to report certain information directly to NCUA pursuant to the agreement with their investing credit unions.  NCUA built an on-line reporting system that went live in the first quarter of 2016, and CUSOs updated their CUSO Registry information in the first quarter of 2017.

NACUSO continues to work with regulators minimize the regulatory burden on CUSOs and to help credit unions realize the maximum benefit from collaboration through CUSOs.  We work to ensure regulations affecting credit unions and CUSOs are as favorable as possible, but we need your help to continue this regulatory advocacy work, please contribute to the NACUSO Advocacy Fund today.

NACUSO Supported Transparency on OTR

NACUSO has long expressed its concern about the growth of NCUA and its extension of its regulatory arm, both directly and indirectly, into areas of questionable statutory authority such as the de facto regulation and examination of CUSOs through the 2013 CUSO Rule.  The extension of regulatory authority by NCUA comes with increased costs, costs that are paid for ultimately by credit union members.

NCUA takes money from the insurance fund to pay for its operations through the Overhead Transfer Rate (“OTR”).  The OTR currently funds approximately 70% of NCUA’s budget.  NCUA does not have to justify its expenses or ask permission from anyone to take as much money as it deems appropriate from the share insurance fund for its operations.  Fortunately, under new leadership, NCUA has decided to be more transparent as part of its budget process and publish details of how it calculates the OTR.

NACUSO 2016-17 Legislative & Regulatory Advocacy Plan

As we explained when we announced the formation of the NACUSO Advocacy Fund two years ago, the regulatory climate that enabled credit unions to maximize the benefits of CUSOs and collaboration is under siege, and as an industry, we need to respond.  NACUSO established an Advocacy Fund to supplement its efforts to promote and protect a collaboration/CUSO friendly regulatory climate.

At the 2016 NACUSO Annual Conference, we shared our 2016-17 NACUSO Advocacy Plan, based upon the four basic precepts upon which our advocacy work is based.  Those four pillars are designed to support an environment that:

  • Encourages credit unions to deliver a better member experience and improve the financial well-being of members
  • Encourages credit unions to seek new collaborative ways to serve members needs
  • Rewards investment in innovation and collaboration
  • Supports the use of CUSOs as the incubators for collaboration and innovation so that credit unions can reap the benefits of entrepreneurialism without direct risks

The Advocacy Plan also identifies the key associational positions that NACUSO is focused on, for the benefit of CUSOs and their credit union owners, which are summarized as follows:

  • Supports the development of clear examination guidelines that recognizes that NCUA has review powers and not examination powers over CUSOs. Such guidelines would inhibit de facto regulatory creep that would treat CUSOs as regulated entities that would discourage innovation and collaboration. NACUSO will intervene with NCUA in the more egregious cases if the CUSO or the investing credit unions request NACUSO’s assistance.  NACUSO opposes any legislative efforts by NCUA to gain statutory authority to directly regulate and examine CUSOs through an unnecessary expansion of the agency’s examination authority over credit union vendors
  • NACUSO supports the modernization of the permitted CUSO Services list to include all loan types that credit unions can originate to help bring scale benefits as well as risk mitigation and expertise benefits to credit unions
  • NACUSO will encourage regulators to view innovation and collaboration as an essential part of a revitalized credit union model and adapt their regulations and supervision to encourage the responsible and prudent development of the collaborative model

Key strategies for accomplishing the NACUSO 2016-17 Legislative and Regulatory Advocacy Plan are detailed in the Advocacy Plan.  In order to have a maximum impact upon the regulators and the industry, CUSOs and their credit union owners must stand united as we promote the unique collaborative opportunities and risk sharing benefits that our CUSOs provide.   Together, our participation in collaboration advocacy efforts through NACUSO will be our most effective way of impacting the future regulatory environment under which CUSOs operate.

NACUSO will focus its advocacy efforts on those issues most critical to the CUSO community as a whole and will attempt to avoid watering down its message on key issues by taking public positions on all issues that may impact CUSOs or credit unions in a more indirect manner.

In the current environment it has become increasingly important for credit unions to find new sources of non-interest income in order to enhance earnings, build capital, and support member growth.  Thus, collaboration and innovation are more critical now than ever before to create sustainability for the credit union movement.  NACUSO educates the industry as a whole (CUSOs, credit unions and other providers) on the benefits of collaboration and innovation, facilitates cooperative business opportunities, and provides leadership on how to implement these strategies within a favorable legislative and regulatory environment.

It is the desire of NACUSO to be recognized as an effective organization in support of building a favorable legislative and regulatory environment through what we consider the four pillars of future credit union success – collaboration, innovation, growth and entrepreneurship.  NACUSO will be balanced in approach, but bold in action to aggressively promote this agenda and will seek to join with other like-minded organizations, when appropriate, to work in collaboration with NACUSO to see these key agenda items accomplished.

All of the organizations associated with the NACUSO Board of Directors have already made contributions to the NACUSO Advocacy Fund.   We urge you to add your collaborative voice to NACUSO’s advocacy efforts.  Please complete the commitment form today, and send your contributions to NACUSO so we can help you.  Please share with your friends in the industry who want to ensure a bright innovative, collaborative future for our industry and our members.  If you or your industry friends are not yet members of NACUSO, now is the time to join, and be part of the collaborative solution.  If you have questions about the NACUSO Advocacy Fund, click the link to go to the NACUSOAdvocacy Fund FAQ’s.

Thank you very much for your support, and for giving NACUSO the opportunity to serve you as you serve your members.  It is a privilege that we truly appreciate.


Jack M. Antonini
President & CEO

Jack M Antonini
President & CEO – NACUSO  (713) 208-0989
NACUSO’s 2018 Network Conference April 16-19 at Disneyland Resort in Anaheim, CA
Learn more about NACUSO in this short video!

NCUA Meeting Provides CUSO Guidance 6/16/16

NACUSO Visits NCUA to Discuss the CUSO Registry and CUSO Reviews

On June 14, Jack Antonini, NACUSO President and Guy Messick, NACUSO General Counsel met with NCUA Staff on the results of the CUSO Registry and the thinking on how CUSO Reviews will be handled.

The CUSO Registry sign-up period and the follow-up by NCUA found there were approximately 900 CUSOs.   NCUA believes that there are more CUSOs that have not reported.  Under the NCUA Regulations (Part 712.1(d)), “A CUSO also includes an entity in which a CUSO has an ownership interest of any amount, if that entity is engaged primarily in providing products or services to credit unions or credit union members.”   So these subsidiary CUSOs are considered CUSOs and required to make annual reports to NCUA.   The NCUA staff believes that many CUSOs were not fully aware of this requirement and there are a number of subsidiary CUSOs that have not reported.   NCUA will be following up with CUSOs to obtain these filings.   NCUA is also scrubbing the data and asking for clarification if the data is indicating that there may have been a reporting error. (more…)

Report on Advocacy Fund spending…NACUSO Working for you

Through the support of our partners, NACUSO raised approximately $63,000 in contributions toward its Legal and Litigation Fund in 2014 with a primary purpose to develop strategies for the most effective way to seek the repeal and/or mitigation of the impact of the CUSO Rule that NCUA had adopted in November 2013.  Subsequently, NACUSO established an Advocacy Fund to supplement the Legal and Litigation Fund.  The goal of the two funds together were to enable NACUSO to coordinate legal decision making, with a crucial advocacy component that will have more impact than the always risky option of legal action.  In total, $190,600 was contributed to the NACUSO Advocacy Fund.  Combined these two related initiatives received total contributions from NACUSO partners of approximately $253,600 in 2014 and 2015.

In keeping with our commitment to be fully transparent and to regularly communicate our usage of these dollars, we would like to provide you with the following information.  NACUSO spent the following amounts from the two funds during 2014 and 2015:


CUSO Registry Clean Up Period 4/22/16

As most of you know, all CUSOs are obligated under the NCUA Regulations to register certain information directly with NCUA on an annual basis.   Over 800 CUSOs did so in February and March.   NCUA is now in the process of making sure all CUSOs have registered.   Their new deadline is April 30.  They are taking CUSO information from the credit union 5300 call reports and sending out letters reminding “CUSOs” that they have to register.   Some credit unions may have incorrectly listed a company as a CUSO.  Other credit unions list their CUSO but use an acronym for the CUSO instead of the CUSO’s full name.   NCUA, not knowing better is sending letters to any and all companies listed on the call reports. (more…)

Regulatory Update 3/15/16

Letter to NCUA regarding CUSO Registry Acknowledgement: Yesterday, NACUSO informed you of a change we negotiated with our General Counsel (Messick & Lauer) with the NCUA regarding the CUSO Registry Acknowledgment each CUSO is required to agree to when submitting their CUSO registration in the NCUA’s CUSO Registry system.  As we pointed out in our Regulatory Alert yesterday, the acknowledgment required CUSOs to agree to be bound by statutes that only apply to credit unions and which imposed penalties that are not applicable to CUSOs.


Change to the CUSO Registry Acknowledgement 3/14/16

During the process of assisting with CUSO Registry questions, it came to our attention that in order to complete the CUSO Registry, CUSOs were required to agree to be bound by statutes that apply to credit unions and which imposed penalties that are not applicable to a CUSO.  On behalf of NACUSO and the many CUSOs in this industry, Messick & Lauer (NACUSO’s General Counsel) have advocated and negotiated to revise this acknowledgement to more accurately describe the duty of CUSOs to respond to the CUSO Registry.  It is a contractual duty with the credit union and not a direct regulatory obligation to NCUA.   As NCUA continues to pay more attention to CUSOs, NACUSO will continue to take action to be the voice of CUSOs and to resist any attempts at regulatory overreach.  The NCUA has changed the acknowledgement text.  For your reference, the text of the previous and current CUSO Registry acknowledgments are below. (more…)

Regulatory Update 2/26/16

NCUA’s CUSO Registry Training & Demonstration webinar held on February 11 is now available to be viewed.  If you missed the webinar, or want to view it again, to help you in completing the CUSO Registry, you can watch it by clicking on the following link:  View 2/11/16 Webinar. You have until March 31, 2016 to complete your initial registration of all CUSOs.