July 18, 2002

Writer's Direct Dial Number
(202) 887-1515

By Messenger

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

Re: Comment on the Evangelical Christian Credit Union's Request for Exemptive Relief Under Sections 15 and 36 of the Securities Exchange Act of 1934; File No. S7-12-01

Dear Mr. Katz:

As you are aware, on June 18, 2002, the Securities and Exchange Commission ("Commission") published in the Federal Register a notice of, and request for comment on, the application of Evangelical Christian Credit Union (the "Applicant") for Exemptive Relief Under Sections 15 and 36 of the Securities Exchange Act of 1934 (the "Exchange Act") (the "Application").1

This letter, which is being filed on behalf of the Bank Securities Association ("BSA"),2 is the comment of such association on the Application. As a threshold matter, the BSA appreciates the opportunity to comment on the bank sweep account exception (the "Sweep Account Exception") in the context of the Application, and hopes that this letter will be of benefit to the Commission as it considers what further action is appropriate concerning the Sweep Account Exception.

The BSA takes no position on whether the Sweep Account Exception, or any of the other exceptions contained in Title II of the Gramm-Leach-Bliley Act (the "GLB Act") (collectively, the "Title II Exceptions"), should be extended to national credit unions. However, the BSA is concerned about the possible implications regarding the Sweep Account Exception that may be raised by the Commission's proposed exemptive relief for the Applicant. In the Application, the Commission appears to be imposing numerous conditions that go far beyond the statutory exception. We are deeply concerned that these proposed conditions may represent the thinking of the Commission staff on the Sweep Account Exception generally. In this regard, the BSA would object to the Commission conditioning the Sweep Account Exception on anything beyond its clear and express statutory parameters.

In our comments on the interim final rules regarding the Title II Exceptions (the "Interim Final Rules),3 we noted that the Sweep Account Exception is available to any bank that sweeps deposit accounts into a money market fund that does not charge an express front-end or back-end sales load. We strongly objected to the Commission's adoption of the National Association of Securities Dealers Regulation, Inc.'s definition of "no-load" for purposes of either the Sweep Account Exception or the Interim Final Rules. As you know, our objections were echoed by two of the three named sponsors of the GLB Act4 and also during a joint hearing of two congressional subcommittees,5 in which the Commission was excoriated for not only adopting the Interim Final Rules on an interim and final basis without a proper notice and comment period but also for its imposition of conditions and requirements that contravene the breadth and express purposes of the Title II Exceptions.6

By noticing the Application, and proposing to condition it on, among other things, the ability of the applicant to represent that the funds made available through its sweep program qualify as "no-load" money market funds under the Rule 3b-17(f), we are troubled that the Commission may be ignoring our objections, and those of the banking regulators and the financial services industry, on this issue.

We hope and expect that the Commission will address the arguments and issues presented in this comment letter and also our comment letter on the Interim Final Rules. In this regard, we expect that any further action concerning the Interim Final Rules, particularly as they relate to the Sweep Account Exception, will follow the normal rule-making procedures required under the Administrative Procedures Act, including a re-proposal of such rules with proper notice and a meaningful opportunity for public comment.

If you have questions regarding this letter, please do not hesitate to call the undersigned at (202) 887-1515.

Very truly yours,

Robert M. Kurucza
General Counsel, Bank Securities Association
Partner
Morrison & Foerster LLP

cc:

Harvey L. Pitt
Chairman, U.S. Securities and Exchange Commission

Dr. Cynthia A. Glassman
Commissioner, U.S. Securities and Exchange Commission

Isaac C. Hunt, Jr.
Commissioner, U.S. Securities and Exchange Commission

Senator Paul S. Sarbanes
Chairman, U.S. Senate Committee on Banking, Housing and Urban Affairs

Senator Phil Gramm
Ranking Member, U.S. Senate Committee on Banking, Housing and Urban Affairs

Congressman Michael G. Oxley
Chairman, U.S. House of Representatives Committee on Financial Services

Congressman John J. LaFalce
Ranking Member, U.S. House of Representatives Committee on Financial Services

Annette L. Nazareth
Director, Division of Market Regulation, U.S. Securities and Exchange Commission

Robert L.D. Colby
Deputy Director, Division of Market Regulation, U.S. Securities and Exchange Commission

Catherine McGuire
Associate Director and Chief Counsel, Office of the Chief Counsel, Division of Market Regulation, U.S. Securities and Exchange Commission

Lourdes Gonzalez
Assistant Chief Counsel, Office of the Chief Counsel, Division of Market Regulation, U.S. Securities and Exchange Commission

The Board of Directors of the Bank Securities Association

_______________________________
1 67 Fed. Reg. 41545 (June 18, 2002).
2 The BSA is the nation's leading membership-based not-for-profit trade association dedicated exclusively to representing the interests of banks and other financial institutions in connection with the offering of securities and investment products and services. The membership of the BSA includes commercial banks, thrift institutions, securities firms, investment companies and other organizations in the financial services industry. The members of the BSA range from some of the largest financial institutions in the country to smaller community banks and savings institutions.
3 See 66 Fed. Reg. 27760 (May 18, 2001). We have attached a copy of the BSA's comment letter on the Interim Final Rules for the convenience of Commission staff [attachment with written filing only].
4 Letter from Congressman James A. Leach, Chairman of the House Committee on Banking and Financial Services, to Chairman Arthur A. Levitt (Jan. 2, 2001); and Letter from Senator Phil Gramm, Chairman of the Committee on Banking, Housing, and Urban Affairs, to Arthur A. Levitt (Feb. 6, 2001).
5 Joint Hearing of the Subcommittee on Financial Institutions and Consumer Credit and Subcommittee on Capital markets, Insurance and Government Sponsored Enterprises of the Committee on Financial Services, U.S. House of Representatives, 107th Congress (August 2, 2001) (the "Joint Hearing").
6 See e.g., the Opening Statement of Chairman Michael G. Oxley, Committee on Financial Services, at the Joint Hearing ("The SEC's interim final rules raise troubling questions as to whether that agency has upheld the letter and the spirit of the law. The Gramm-Leach Bliley Act was never meant to make banks disrupt their customer relationships, and force traditional banking activities into broker-dealer affiliates."). See also, the Opening Statement of Ranking Member, John J. LaFalce, Committee on Financial Services, at the Joint Hearing ("I am very concerned that the interim final rules adopted by the Securities and Exchange Commission to implement Title II have taken a one-sided approach that is not reflective of either the statutory language or Congress's intentions. In many cases, the rules adopted by the SEC will not allow banks to continue to conduct trust, custody, safekeeping, and other activities that Congress determined were appropriately conducted in a bank. The rules appear to add restrictions that are not part of the statute and impose a far greater administrative burden than is necessary or appropriate to implement the statute, creating significant added expense for both banks and their customers. As is clear from some of the concerns raised by the banks and bank regulators, in some cases the rules effectively negate the exemptions created by Congress."). We also have attached for convenience a written copy of our Oral Testimony before the Joint Hearing [attachment with written filing only].