Subject: File No. S7-26-04
From: Beverley Rutherford
Affiliation: None

August 30, 2004

Thank you for the opportunity to comment on your proposed rule (Regulation B) which will grant credit unions exemptions from certain broker-dealer registration requirements that other financial institutions currently receive. I am responding on behalf of a state-chartered credit union in Virginia and will focus on the proposals regarding credit unions.

Generally, the proposed rule would govern the following security activities:

* permit credit unions to enter into networking arrangements with broker-dealers thus extending the Securities Exchange Act of 1934 (Act) exception to credit unions.

* allow credit unions to sweep share accounts into no-load money market funds under the same terms as banks in the exception outlined in the Act

* permit credit unions, under certain conditions, to buy and sell securities for themselves, or for accounts for which they act as trustee or fiduciary, without registering as a broker

We believe permitting all credit unions to engage in the activities as outlined above will allow members of credit unions to benefit as credit unions will be able to offer their members a wide range of financial services at a reasonable cost, and compete with banks and thrifts who do have this exception. We also believe significant regulatory oversight exists which should alleviate any investor protection concerns with respect to extending these exceptions to credit unions. As such, 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. 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.

Please feel free to contact me should you have any questions.

Beverley F. Rutherford, CIA, CUCE
Vice President/Compliance
Virginia Credit Union, Inc.
Richmond, Virginia
(804) 560-5665