July 18, 2002

Mr. Jonathan G. Katz
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549-0609

RE: File No. S7-12-01; Notice of Application of Evangelical Christian Credit Union for Exemptive Relief Under Sections 15 and 36 of the Exchange Act and Request for Comment.

Dear Mr. Katz:

The Association of Corporate Credit Unions (ACCU) appreciates the opportunity to comment on the Securities and Exchange Commission's (SEC's) notice of application of Evangelical Christian Credit Union (ECCU) for exemptive relief under Sections 15 and 36 of the Securities and Exchange Act of 1934 (Exchange Act).

By way of background, ACCU serves as the primary trade association for the thirty-three corporate credit unions (corporates) located around the country. Corporates are wholesale credit unions that provide liquidity, investment products, payments settlement and other financial services to their members, the nation's 10,500 federal and state-chartered credit unions. In order to qualify as a corporate credit union, the credit union must be operated primarily for the purpose of serving other credit unions [see 12 C.F.R. 704.2]. In addition, membership of natural persons in a corporate is limited only to those individuals such as directors or incorporators as may be required by applicable law.



On May 11, 2001, the SEC issued interim final rules defining certain terms used in, and granting additional exemptions from, the functional exceptions from the definitions of "broker" and "dealer" added to the Exchange Act by the Gramm-Leach-Bliley Act (GLBA). To allow banks sufficient time to implement changes necessary to comply with the interim final rules, banks and thrifts have a temporary, general exemption fro broker-dealer registration. Once the SEC adopts amendments to the interim final rules and the rules become effective, banks and thrifts acting as brokers will not be considered brokers only if they meet one of eleven product or transaction-specific exceptions of the GLBA or are otherwise exempt from the definition by SEC rules.

One of the functional broker exceptions is for sweeping funds into no-load money market funds, as provided in new Section 3(a)(4)(B)(v) of the Exchange Act. However, like the other GLBA functional exceptions for banks, the sweep account exception is by its terms available only to banks as defined in Exchange Act Section 3(a)(6). Credit unions are not banks within the meaning of this definition. Without this exemption, credit unions generally would be the only depository institutions unable to sweep deposit account balances into no-load money market funds.

ECCU, a California state-chartered credit union, submitted a request to the SEC to offer its member institutions a sweep account service that would involve linking a deposit account with an omnibus account maintained with a registered broker-dealer and representing the interests of ECCU member institutions in one or more no-load money market mutual funds. Under the proposed arrangement, funds would automatically transfer back and forth between the two accounts, maintaining a specified minimum balance in the deposit account and automatically investing deposits above a specified target amount in money market mutual funds.

ACCU believes that the SEC should approve ECCU's request to offer sweep account services without the need to register as a broker-dealer. In addition, ACCU urges the SEC to allow all credit unions and corporate credit unions to offer sweep account services without registering as a broker-dealer. This would include federally and privately insured credit unions. ACCU recognizes that ECCU proposes to offer sweep account services to organizations, as opposed to individuals. However, ACCU does not believe that there is a legal or public policy basis for the SEC to only allow such arrangements without the need for a credit union to register as a broker-dealer. Banks and thrifts will be allowed to provide these services to both their corporate and individual customers and there has been no discussion, at least publicly, about the possibility or need to restrict these services to corporate entities.

In our comment letter that we submitted last year in response to the SEC's interim final rules, ACCU requested that credit unions and corporate credit unions receive the same exceptions from the broker-dealer registration requirements as banks and thrifts. The basis for this request was that credit unions, banks, and thrifts are subject to similar regulatory requirements and examination standards and that the exceptions for credit unions and corporate credit unions are necessary in order to mitigate possible anti-competitive effects. ACCU maintains that these reasons are equally applicable to ECCU's request.

ACCU again thanks the SEC for the opportunity to comment on these issues. If you or your staff has any questions about ACCU's comments, please do not hesitate to call me at 202/508-6731.


Christiane G. Hyland

Christiane G. Hyland
ACCU Executive Director

cc: Corporate Credit Union CEOs