CU Times Correspondent-at-Large

SAN DIEGO -- In a nod to the massive turnover credit unions will experience as baby boomer leadership retires, NCUA Vice Chairman Rodney Hood provided an update on his Blueprint 20/20 initiative to pump new blood into the credit union industry.

Blueprint 20/20 is designed to help the industry attract a new generation of interns, employees, volunteers and members, Hood said.

"Most of us here have had long, successful careers in credit unions," he said. "I think our young people today need to have the opportunity learn about the valuable career opportunities in credit union system, and Blueprint 20/20 will help you."

Hood rounded up an 11-person study group that was heavy on leadership from credit unions with college-based fields of membership and included two college administrators. Not surprisingly, the group recommended using the institutions to recruit Gen Y.

The agency will soon release blueprint information that will advise credit unions on how to create, administer, and in some cases, pay for college programs, including internships, mentoring and strategic consulting projects for MBA students, and building relationships with college placement offices, Hood said.

The initiative will also provide advice on how to recruit new volunteers and how to perform management assessment of timely issues, such as membership growth, marketing campaign, product analysis and membership segmentation.

Hood said credit unions shouldn't overlook the opportunity to attract young members by offering college loans.

"With the prices now at Sallie Mae, many credit unions have demonstrated prime examples of people helping people, making affordable loans that send students to college," Hood said. "Don't overlook how that helps attract young people to credit unions."

Hood had little on his agenda, saying he preferred to round out his time with an interactive question and answer session with the standing-room-only audience. The vice chairman fielded a number of questions from the audience, including:

Our examiner complains about interest rate risk in the mortgages we keep on our books. How can the agency expect us to make mortgages when we get hit with interest rate risk accusations, even when we're operating well within regulations?

Hood: The new way we're conducting examinations should take care of that. I don't think it's our place to dictate that you sell mortgages on the secondary market, especially if, like you said, you have the other controls in place. Now, you can show your examiner your risk controls, the ways you're managing that risk.

I think some examiners read something in the newspaper and try to apply it to a credit union without looking at risks unique to that institution, so hopefully in your next exam cycle, you'll have better results.

Look, folks, regulation is regulation. I don't expect us all to sing Kumbaya together, but there should be some sense of working together toward a common goal.

What asset size should a credit union be before it considers a member business lending program?

Hood: It's not really an asset question, because some credit unions have as little as $50 million in assets, but have made good business loans. The latest NAFCU newsletter did an article on micro lending, which would be a good idea if you want to test the waters.

You'll definitely want to take a look at the core competencies of your lending staff and your oversight ability. Those things are really more a measurement than asset size. The issues are more about skill, capacity and infrastructure than asset size.

For those of you who may not have the ability to do a lot of member business lending, I'm a huge proponent of CUSOs. There's a member business lending CUSO in Texas that has been very successful, and I recommend CUSOs as a strategy because it allows you to diversify risk.

How much more regulation can we expect around secrecy and BSA?

Hood: The Patriot Act is something we all support, but it's creating such a regulatory burden for you. I wish I could wave a wand and make it go away, but we have to support what the Treasury's doing. And we're seeing some success generated from those Suspicious Activity Reports. They are catching terrorists; there are some success stories out there.

I don't see it becoming even more arduous, in fact, some groups are looking for a carve out, not reducing the elements, but carve outs for smaller institutions. Credit unions know their member-owners. You know their birthdays and their anniversaries, so what can be done to make this easier on those who know their members so well? That might give the bank and trade groups a heart attack, but I don't care.

What is your position on disclosing executive salaries?

Hood: It hasn't come before the board yet, but in my opinion, quite frankly, your salaries are none of my business. What you make is not for me to decide, it's between you and your board. I suppose if your members want to know, they can ask you. We're just too busy, we want to focus our attention elsewhere. Executive compensation disclosure may be on the horizon, but at the end of the day, I don't see it becoming a big issue. The House Ways and Means Committee wanted to ask about compensation for hospital administrators. As you know, many hospitals have nonprofit structures, and there were rumors they were making between $2 million and $3 million a year, and there were some rumors that credit union executives were, too.

Personally, I think some of you deserve another zero attached to your salaries. You're running very complex institutions, not just showing up cavalierly, but making difficult decisions in tough markets. I think you're well compensated, but you could use another zero, in my opinion.

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