The Window of Opportunity for Credit Unions is Here

Two things struck me during my Senate confirmation process. First, many Senators reminded me that the agency has been criticized as a “cheerleader” for the credit union system. Second, they inquired, “How do you intend to remain independent and focused on safety and soundness?” I viewed these questions as windows of opportunity for NCUA – opportunities to bolster NCUA’s reputation and reassert NCUA’s efforts to balance safety and soundness while reducing regulatory burden. I think Congress’s intent in the Federal Credit Union Act is clear – ensure a strong federal credit union system and have a regulator that oversees the viability and integrity of that system. If striving to balance safety and soundness with regulatory flexibility is being a “cheerleader,” then I confess – guilty as charged. So how can the agency seize the opportunities noted above? * Safety and soundness: As an NCUA Board member, I must weigh the need to assure members’ money is protected and well-managed with the competing need of not restraining credit unions’ ability to be nimble in today’s fast-paced financial services marketplace. So how about today’s key issues? How should credit unions confirm their service to all segments of their fields of membership? How should the viability of the federal charter and a credit union’s choice of charter be preserved? How should the conversion regulation be clarified? * Measuring service: NCUA recently issued Letter to Federal Credit Unions 06-FCU-02. The letter alerts federal credit unions to an initial effort by NCUA to respond to congressional and Government Accounting Office inquiries. The letter is not, I repeat, is not, CRA for federal credit unions. The pilot program is a beginning step to address a complex issue – how to effectively assess and measure what federal credit unions do to serve all segments of their fields of membership. The opportunity? NCUA needs to recognize the inherent uniqueness of credit unions across size, geographic location and charter type and ensure that the diversity of federal credit unions’ service to their members is reflected in any analysis of the data collected. NCUA needs to maintain a broad, open-minded view of the opportunities and possibilities for credit unions to serve consumers. And the opportunity for credit unions is to help shape that response and define it so that others, such as Congress or the banking industry, do not impose their views on the system. * Charter choice: Field of membership challenges continue to be raised. Current litigation in Utah and Pennsylvania seeks to overturn NCUA’s chartering policies that have been in place for years. Recently, NCUA issued a moratorium on the addition of underserved areas to all non-multiple common-bond federal credit unions. It also issued a proposed rule seeking comment on this issue. The opportunity? NCUA should continue its strong advocacy of the federal charter and credit unions’ choice of field of membership. NCUA must also strenuously defend credit unions’ ability to provide service to underserved areas. This is a critical component of accomplishing the credit unions’ essential mission of providing financial services to people of modest means. The flexibility and benefits of charter choice must be zealously protected by NCUA. Federal credit unions cannot and should not be stymied by regulatory prohibitions that limit options to serve the underserved or force them to divest of already assimilated underserved areas. * Conversion to mutual savings banks: Conversions to mutual savings banks continue to be an issue fraught with emotion and controversy for the credit union system. The opportunity? NCUA is fairly limited by statute on what it can do in a credit union conversion. If, as many assert about conversions, “It’s about greed, stupid,” then NCUA cannot regulate greed. However, I concur with the great credit union philosopher James Carville who once remarked, “It’s about the members, stupid.” NCUA should reevaluate its current regulation in the context of lessons learned from past conversions and assure that fair and full disclosure is provided to members. This may include adherence of the board to its fiduciary obligations during the conversion, return of equity to members, the rights and obligations of members who oppose the conversion and clarifying existing disclosure requirements. * Strong, well-respected regulator: In addition to regulatory opportunities, my conversations with Senators last October confirmed that NCUA must continually strive to earn and maintain the respect of Capitol Hill, its sister FFIEC agencies and the credit union system. The opportunity? Continue to be an active participant in joint agency committees and advisory groups. Currently, NCUA participates regularly with a variety of interagency groups on issues of common interest. I believe NCUA must continue to seek out opportunities at the staff and Board levels to be an active participant and contributor with other federal financial regulators. NCUA should also pursue the opportunity to continue building relationships with members of Congress. The contacts of each NCUA Board Member needs to be leveraged to effectively foster a greater understanding of the agency’s activities and processes by Capitol Hill. The agency is in an unparalleled position to advocate for the viability of the federal credit union charter within the larger financial services marketplace. From its vantage point, the agency can attest to the number and complexity of regulations with which credit unions must comply and to the work of federally chartered credit unions in serving all aspects of their fields of membership. The list of issues above represents only some of the opportunities for NCUA in the coming months. They say that some opportunities only come around once in a lifetime. I certainly believe that’s true about serving on the NCUA Board. For me, there was the opportunity, and here, now, is the honor of being nominated and confirmed to serve. These are some of the opportunities for the agency. Now is the time to seize them.