July 18, 2002

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: File No. S7-12-01, Credit Union Sweep Accounts

Dear Mr. Katz:

The Independent Community Bankers of America (ICBA)1 appreciates the opportunity to comment on the application of the Evangelical Christian Credit Union (ECCU) for exemptive relief under sections 15 and 36 of the Securities Exchange Act of 1934 to offer sweep accounts without registering as a broker. Under separate cover, the ICBA has joined with other interested parties in commenting on the proposal. However, the ICBA also wishes to raise additional comments.

The ICBA believes that the decision to grant an exemption to ECCU should be made independently of the analysis the Commission is currently applying to the interim rule crafted under the Gramm-Leach-Bliley Act regarding exceptions for banks and savings associations. Merely because an exception is appropriate for banks and thrifts does not mean that same exception is appropriate for credit unions. Credit unions are entities distinct from banks and savings associations with their own charters and separate federal supervision and their own unique attributes. For example, Congress has granted credit unions tax exempt status, an advantage not similarly conferred on banks and thrifts. Without debating the propriety of the tax exemption and without debating the distinctions between credit unions and banks, the SEC should recognize that a credit union is a different type of financial institution from a bank or a savings association. Therefore, merely because banks have been granted an exemption from registration does not automatically mean that same exemption should be extended to a different type of financial institution, i.e., credit unions.

The ICBA questions whether the Commission has sufficient information about credit unions or their supervision to create a general exception for credit unions. For example, prior to granting any kind of general exception, the Commission should have an understanding of credit unions' experience with sweep arrangements in particular and investment programs in general, the kinds of investment opportunities that credit unions offer their customers, how they structure those programs, how those programs are supervised, and so forth. The Commission should also have an understanding of how the National Credit Union Association (NCUA) supervises and examines those programs for compliance with laws and regulations. Since credit unions generally do not engage in sweep activities, the NCUA has little experience with sweep arrangements, unlike the banking and thrift regulatory agencies, which have been supervising bank investment activities for many years.

If, however, the SEC believes that an exception is appropriate for ECCU, the ICBA does not believe that should extend to a general exception. Any decision by the Commission to allow a credit union to engage in sweep accounts should be made on a case-by-case basis, based on the facts of that particular application and only after ensuring that particular credit union has the expertise to engage in the type of activity contemplated.

Thank you for the opportunity to comment. If you have any questions or need any additional information, please contact Robert Rowe, ICBA's regulatory counsel, at 202-659-8111 or robert.rowe@icba.org.


A. Pierce Stone

1 ICBA is the primary voice for the nation's community banks, representing 5,000 institutions at more than 17,000 locations nationwide. Community banks are independently owned and operated and are characterized by attention to customer service, lower fees and small business, agricultural and consumer lending. ICBA's members hold more than $511 billion in insured deposits, $624 billion in assets and more than $391 billion in loans for consumers, small businesses and farms. They employ nearly 231,000 citizens in the communities they serve.