NCUA's New Chairman Focused on Flexibility And Open Dialogue with Credit Unions

ALEXANDRIA, Va. – Credit unions can look forward to greater regulatory flexibility and agency efficiency during JoAnn Johnson’s term as chairman of the NCUA Board, says Johnson. As chairman, Johnson noted, there are more demands on her time. “The role as chairman provides for additional responsibilities and duties such as serving as the official spokesman for the agency and testifying before Congress,” she said. “There are more engagements and meeting requests. I enjoy the interaction with staff and with credit union officials around the country. As a result of being designated Chairman, engagement requests increase and I have found that time is even more limited as Chairman, due to the day-to-day responsibilities in Washington.” Johnson added that she is honored by the designation and looks forward to “continuing a very productive term.” First and foremost, she said, “My agenda is to continue the safety and soundness of credit unions. If credit unions do well, I, as a regulator, am successful.” Aside from this most basic of regulatory functions, Johnson said “one of my major focuses” will be to work toward expanding credit union financial education programs. The former Iowa schoolteacher noted the “startling” rise in bankruptcies, particularly among younger adults. “With financial education early, whether in the homes or schools, there’s a much greater chance for success,” she said. Johnson added that the Financial Literacy and Education Council on which she serves is putting together some sources to help with financial education. She said she continues to hear success stories from credit unions as she travels the country and also stressed that credit unions’ relationships with their members helps the campaign for financial education. “We know the need is great,” Johnson said. The new chairman added that she will continue “reinforcing and encouraging” financial education programs at every opportunity. She said her emphasis on financial literacy projects also fits in well with NCUA’s Access Across America program to reach out to the underserved. Johnson also plans to continue the agency’s wise use of resources, including communication. In a week or so, she said, NCUA will be rolling out an electronic subscription service so the credit union community and its regulator are more connected. Credit unions can be alerted to new items on the agency’s Web site (www.ncua.gov), such as legal opinion letters. Conversely, Johnson wants to encourage credit unions to let NCUA know how its regulations are impacting credit unions. “We encourage communication between credit unions and regional offices to ask for assistance when needed,” she said, adding that it is much better to head off problems before they grow. Another thing Chairman Johnson wants to communicate to credit unions is to consider member business lending. “I continue to encourage credit unions to take a look at member business lending, but it’s not for every credit union,” she said. During the last update, approved last September, several of the commenters made good suggestions but they fell outside the scope of the review at the time. Johnson noted that NCUA’s member business lending rule will be part of the regular one-third review of regulations in 2004, possibly making an appearance at the June board meeting. Some of the proposed changes are the result of the public’s recommendations. Additionally, the chairman said the agency would coordinate more with the Small Business Administration to make the entire process of getting involved in SBA and member business lending more seamless for interested credit unions. Johnson is also shouting from the rooftops-or at least podiums at credit union conventions-that credit unions need to have proper succession planning in place. More than half of credit union CEOs will be eligible to retire in the next 10 years. Though she has been warning credit unions of this problem for some time now, she said some still are not getting the message. And it is not just the CEOs credit unions have to worry about, but also the senior staff and board members. Johnson said she did not like to see mergers occur simply because there was no succession plan in place and it is not only small credit unions getting caught. The issue was initially brought to Johnson’s attention within NCUA. The agency has engaged in cross-training among staff to ensure smooth transitions as retiring employees head out to places like Florida and Arizona. Johnson patted NCUA on the back for its great staff and said it is especially important to keep its examiner core well trained. “Qualified lenders deserve qualified examiners,” as she often says. She wants the agency to put additional focus on risk management, particularly with increasing member business lending involvement. She noted that additional attention will be paid to risk if credit unions are permitted a risk-based capital system, as is included in the Credit Union Regulatory Improvements Act (H.R. 3579). Johnson met with CURIA’s main sponsor, Congressman Ed Royce (R-Calif.) recently. She has been keeping a higher profile on Capitol Hill in her chairmanship. She also met with her home state U.S. Senator Charles Grassley (R-Iowa), a chief supporter of the bankruptcy reform legislation in the Senate. “It’s important to establish a relationship with legislators and with those whom you’ll be dealing.” she said. “Anytime you can have a dialogue and communication, you’re benefited by it.” In her visits with members of Congress, Johnson also noted that she has not heard “a real desire” to tax credit unions. “I wholeheartedly agree with President Bush that taxing America’s credit unions does nothing to help more Americans achieve the American Dream of economic empowerment and financial self-sufficiency, especially in unbanked areas,” she said. “In fact, I believe it would hinder not-for-profit financial cooperatives in providing these much needed services. Sure, taxing credit unions will remain on the radar for some groups seeking taxation on credit unions. However, President Bush and Secretary Snow have long-stated unequivocally that taxing America’s credit unions is a non-starter.” Johnson, like most in the credit union community, is interested in seeing the vacant seat on the NCUA Board filled. Former Chairman Dennis Dollar resigned as of April 30 and the seat has remained vacant since. Johnson knows what she would like to see in the next board member: somebody with the same philosophies regarding safety and soundness, regulatory flexibility, and reducing regulatory burden and paperwork. For the time being, though, Chairman Johnson said, “We’ll make a two-member board work. I have great respect for Ms. Matz.” She explained that the two treat disagreements professionally and share the same desire to improve credit unions. She added that she does not see any controversial items arising at any board meetings but the one Republican-one Democrat board will not avoid them either. Johnson served in the Iowa State Senate from 1994 until 2002 when she was appointed to the NCUA Board. She chaired the Ways and Means Committee from 1996 to 2000 and the Commerce Committee from 2000 until her appointment. Johnson began her political activities as a congressional campaign volunteer in 1984 and went on to become campaign organization director and campaign manager. In 1992, Johnson successfully managed her brother’s campaign for the Iowa House before she ran for the state Senate. She also served as the Iowa Legislative Co-Chairman for Bush-Cheney 2000. Johnson formerly taught kindergarten through twelfth grade physical education classes and coached a number of teams, including boys’ junior-high football. She was actively involved in family farming, a 4-H leader, director of the local food pantry, economic development board, Sunday school teacher, library board and school board, university alumni board and Rotary International. Johnson began her political activities as a congressional campaign volunteer in 1984 and went on to become campaign organization director and campaign manager. In 1992, Johnson successfully managed her brother’s campaign for the Iowa House before she ran for the state Senate. Then-Texas Governor George W. Bush invited Johnson to serve as the Iowa Legislative Co-Chairman for the Bush-Cheney 2000 campaign. “Having been in the political and public policy arena for over 20 years, I believe one of the most beneficial lessons I have learned is the importance of building collaboration in initiatives and the importance of communication with the general public constituencies and with the executive and legislative branches of government,” she said. Johnson added, regarding her current post, “I maintain an open door and am eager to hear from credit union leaders, volunteers, and members on what issues are important to them and how NCUA’s regulations affect their service.” [email protected]