CU Trades Endorse NCUA 'Second Chance' Initiative

People who have been convicted of minor offenses as young adults should be able to work at credit unions without the approval of the NCUA board, credit union trade groups said, in supporting the agency’s Second Chance initiative.

“The Board recognizes that many Americans face hiring barriers due to a criminal record, a great number of which are not violent or career criminals, but rather people who made poor choices early in life who have since paid their debt to society,” the agency said, when the board proposed the initiative earlier this year.

Under the proposal, credit unions would no longer be required to submit applications to the agency to employ people who have bounced checks for a moderate amount or have been convicted of  “small dollar simple theft, false identification, simple drug possession, and isolated minor offenses committed by covered persons as young adults.”

“Offering second chances to those who are truly penitent is consistent with our nation’s shared values of forgiveness and redemption,” the agency said

The plan would decrease the regulatory burden for credit unions, while continuing to mitigate the risks for credit unions, Luke Martone, CUNA’s senior director of advocacy and counsel.

“We believe certain ‘bad’ check offenses…generally are low-risk and should be treated as de minimis,” he added.

He said that as noted by the NCUA board, research shows that drug convictions are a disproportionate burden on people of color.

Martone said that CUNA has been advised that it is unlikely that credit union insurance premiums would increase as a result of the initiative. He added, however, the board should be willing to review the proposal if there is anincrease in fraud at credit unions.

NAFCU officials endorsed the initiative, while expressing concerns about the fidelity bond implications of the plan and whether the waiver process could compromise sensitive credit union information.

Federal banking regulators are adopting policies to broaden the waivers for people who have been convicted of minor offenses, Mahlet Makonnen, NAFCU’s regulatory affairs counsel wrote.

“Nearly one-third of American adults have been arrested by age 23,” she wrote, adding that “under current agency policy, those individuals would have trouble obtaining employment,” she said.

“The presence of a criminal record requirement significantly impacts minorities, particularly black Americans; this is further exasperated by their experience of racial discrimination in the labor market,” she wrote.

She added, however that NAFCU members are worried that the initiative could increase insurance premiums for credit unions.

“Insurers have historically increased premiums in instances where an employee has any theft or fraud conviction,” she said, adding that the NCUA should weigh the costs and benefits of requiring a fidelity bond for people who qualify for employment under the initiative.