FROM THE OFFICE OF PUBLIC AFFAIRS

Thank you very much for having me here today to address some of America’s leaders in the credit union industry.  Representing both the CEOs of state credit unions as well as the supervisors which regulate them, NASCUS provides a unique forum for participants in this industry to meet together and discuss important ideas that affect not only state-chartered credit unions, but our nation’s economic health as a whole.  

As you well know, state and federally chartered credit unions play an important role in providing financial services to Americans who participate in all aspects of our national life.  From teachers, to unions, to our policemen and firemen, to small businessmen and women across our country, credit unions allow individuals who share a common bond to come together and create their own associations to meet their financial services needs.  Some of America’s credit unions rank among the largest financial services providers in their communities; others play a role not unlike that of the old Bailey Building and Loan Association in the movie “It’s a Wonderful Life.”  In either case, credit unions play a vital role in ensuring competitiveness in America’s financial services industry by providing valuable options for Americans to choose where to place their deposits, and increasing opportunities to obtain credit.

State-chartered credit unions play a uniquely important role in this process.  The dual banking system, which allows institutions to choose whether to be chartered at the state or federal level, increases both our opportunities to access financial services and the likelihood that individuals will find creative new ways to provide those opportunities.  The state-chartering system allows us to be more innovative with the range of financial services offered to consumers, and allows us to tailor our particular regulatory structures in a way that most meets the needs of our local communities.  The best example of this is the frequency with which credit unions are able to switch their charters between the state and federal levels.

I want to thank you for the leadership which you have shown in providing Americans with financial opportunities.  I once had a visit with the President of one of our credit unions, who told me that her business wasn’t simply a way to make a living, but rather it was a vocation.  This person’s credit union happened to be located in one of America’s poorest neighborhoods; most of her members, she told me, had not only never had a loan before; not only never owned their own homes; many had never even been in a bank.  By providing these men and women with access to financial services, she was taking a step towards improving their lives and thus improving their community. 

And I know that her story was not atypical.  I’m sure many of you recognize in her story your own experiences in fulfilling a mission to improve the lives of everyday Americans by providing them with the means to take their financial well-being into their own hands.  This critical role, which credit unions play such an important part in filling, is invaluable to improving our country. 

Of course, in Washington we are also very concerned with improving the quality of life for all Americans.  President Bush has taken the lead in the fight to provide Americans with control of their own economic well-being, and that leadership is invaluable at this time in our nation’s history.

Tomorrow marks the second anniversary of the cowardly attacks of September 11.  But even before the terrorists struck, our economy was in recession due to the burst of the market bubble and a general weakening in demand.  The attacks of 9-11, occurring in the very heart of America’s financial sector, threatened to completely derail the economy and throw chaos into our economic life.

President Bush responded to this threat with vigor.  He proposed tax cuts which some in Washington couldn’t wait to attack, saying “now is not the right time.”  But the President’s response was straight-forward:  if our economy is slow, the answer is to allow people to keep more of their own money.  The President knew that we weren’t going to climb out of a recession by having the government spend the people’s money; we would get out of recession by stimulating growth through allowing the taxpayers to keep more of what they earn.

 I don’t think I need to tell you who was right in the tax cut debate; the results speak for themselves.  Under the President’s leadership our economy has begun to grow; we have seen promising results over the last few quarters in the GDP, business spending, and continued strength in housing starts and consumer spending.  Real wages have also increased.  Under the President’s leadership we have emerged from recession.  Although we are not out of the woods yet, and fragility still exists in some sectors of the recovery, we are well on our way to meeting the President’s goal that every American who wants a job should be able to get one.

Towards this end, the President recently announced his economic plan, entitled “A Full Agenda for the Creation of Jobs in America.” The President’s plan demonstrates a rock solid commitment to expanding growth and opportunities in the labor market.

The President’s plan has six points to build employer confidence and create momentum to hire new workers by:

  *    Making Health Care Costs More Affordable and Predictable.  Health insurance
costs for employers have been rising by 10 percent per year since 2000, causing businesses to hire fewer workers and too many families to go without insurance. President Bush proposes to allow small businesses to pool together to purchase health coverage for workers at lower rates; expand medical savings accounts to give workers more control over their health care insurance and costs; and reduce frivolous and excessive lawsuits against doctors and hospitals that drive up insurance costs for workers and businesses.

*    Reducing the Lawsuit Burden on Our Economy.  President Bush has proposed,
and the House has approved, measures that would allow more class action and mass tort lawsuits to be moved into Federal court - so that trial lawyers have a harder time shopping for a favorable court.  The President's reforms would also ensure that, in a class action lawsuit, most of the benefits of a settlement will actually go to the people who were injured.  These reforms will help businesses focus on creating jobs, rather than fighting junk lawsuits.

*    Ensuring an Affordable, Reliable Energy Supply.  Businesses depend on affordable and reliable energy.  Energy shortages, price spikes, and blackouts disrupt the economy and discourage businesses from planning with confidence and adding new workers.  President Bush has proposed a comprehensive national energy plan to upgrade the Nation's electrical grid, promote energy efficiency, increase domestic energy production, and provide enhanced conservation efforts, all while protecting the environment. 

*    Streamlining Regulations and Reporting Requirements.  Government has a
responsibility to ensure that its regulatory actions are reasonable and affordable.  Too often, government regulations and compliance burdens discourage, rather than promote, job creation.  The President will continue to work to simplify and streamline regulations, along with ensuring that well-intentioned compliance requirements do not have the unintended effect of killing jobs.  The Administration also recently streamlined tax reporting requirements for small businesses, helping 2.6 million small businesses save 61 million hours of unproductive work.

*    Opening New Markets for American Products.  American workers can compete
with anyone in the world when given a chance.  Unfortunately, foreign taxes and tariffs drive up the costs of American products in too many countries, making our products more expensive and less competitive than those produced elsewhere. For example, in Chile, some kinds of American-made heavy machinery (such as motor graders) produced by American workers cost $11,200 more than those produced in the European Union or Canada solely because of tariffs.
President Bush recently signed into law new free trade agreements with Chile and Singapore that will enable U.S. manufacturers to compete on a level playing field - and he will continue to work to open new markets to American products.

*    Enabling Families and Businesses to Plan for the Future with Confidence.
To make important spending, saving, and investment decisions, America's families and businesses need to be able to plan for the future.  Right now, some key elements of the tax relief passed by Congress and signed into law by President Bush - such as the increase in the child tax credit, the elimination of the death tax, and the new incentives for small business investment - will expire in a few years.  For example, a married couple with two children and an annual income of $40,000 would face a $922 tax increase (112% increase) in 2005 if these and similar provisions in the Jobs and Growth Act are not made permanent.

As the President has said, these specific steps will help us build on our economic recovery and move on to the next stage of economic progress - the sustained expansion of employment. 

Ironically, one of the sources of fragility in our economy is the perverse consequence of our own industriousness.  American productivity has increased at a rate never before seen in human history.  As an example, the President recently noted that in 1970 it took 40 hours of labor to produce a car; it now takes 18.  The sweeping technological innovation of the last thirty years, particularly in the area of computing and data processing, has meant that our workers can out-produce and out-compete workers everywhere else.  Greater productivity means less expensive products and lower business costs; it also means that some workers will be temporarily displaced while they learn new skills in order to take on new jobs created by the technological revolution.   We are moving towards a society where human capital, in the form of human knowledge, is truly the greatest source of wealth.  One need not think back very far in human history to remember when human labor was viewed as not only cheap, but humans themselves were thought of as expendable.  One of the greatest fruits of the American creed, which values the individual and his or her rights above all else, is that it has resulted in an economic system where the man or woman at his or her desk is indeed the most valuable resource in the entire organization.  It is difficult to fully express what a radical change this is from all that has come before us, and difficult to fully predict what new opportunities it will present our posterity.

Of course, we cannot discuss the economy without taking into account the uncertainty that remains stemming from the continued threat of terror attacks.  9-11 reminded us again that we live in a world where many people despise us and our way of life; despise freedom and are envious of the blessings which liberty provides.  This Administration has made combating terror its top priority.  Even as we meet here today, there are thousands of American fighting men and women placing themselves in harm’s way so that the American way of life will survive.  These heroes’ sacrifice makes what we do possible, and it is impossible to overstate their courage or the debt of gratitude we owe them. 

Likewise, the President has mobilized the Federal government to prevent terror here at home.  The creation of the Department of Homeland Security was a critical step in reorganizing the government to focus our resources on stopping terror.  Likewise, the Terrorism Risk Insurance Program, which is run out of the Treasury Department, exists to provide a temporary federal backstop in the terrorism insurance market.  Thanks to this program, businesses across America are ensured that they have access to insurance for this new type of threat to their operations. 

This Administration remains committed to providing both economic and personal security to all Americans.  The challenges we have faced since President Bush took office have been the most daunting to face our country in generations, but the President remains committed to ensuring that our economy is strong and our homes and families are secure.  You in this room play an important role in meeting this challenge.  Your leadership in your communities, in providing access to credit and financial services to your members, in providing prudent supervision of your institutions, is what allows us to own our own homes, run our own businesses and provide a better future for our children.  Thank you for your dedication, and thank you for allowing me to visit with you today.