Thank you, Dan. Over 81 years ago, on March 12, 1933, President Franklin Delano Roosevelt’s voice entered America’s living rooms for the first of his famous fireside chats. He began: “My friends, I want to talk for a few minutes with the people of the United States about banking.”
With those words, FDR set in motion a series of initiatives to renew and revitalize America’s financial institutions. And so 80 years ago last month, the Federal Credit Union Act became law. My responsibility is derived directly from the wording of that Act: to protect credit unions’ safety and soundness and “enhance the public benefit that citizens receive from these cooperative financial services institutions.”
Of course, FDR probably never envisioned our nation’s credit union system growing to more than $1 trillion in assets, and offering sophisticated financial services to nearly 100 million Americans. This is an iconic system that I know you and many consumers believe offers better products than banks, better pricing than banks, and a sense of community and service missing from banks.
It seems likely that FDR could have envisioned an event like our recent Great Recession. After all, FDR had seen even worse. He knew what a bursting bubble could do to the economy, to people’s lives, and to their life savings.
Yes, our Great Recession is technically over. By most important measures, credit unions are continuing a steady recovery:
- Net worth and loans are growing.
- Delinquencies and charge-offs are stable.
- Membership is at an all-time high.
So, as we look out at America’s credit unions, we see encouraging trends.
But as a regulator always on the lookout for the safety and soundness of credit unions, it’s NCUA’s job to see more than that. It’s our duty to maintain a modern, efficient and resilient regulatory framework for the credit union system. This means protecting institutions so they will remain integral to our economy for the next 80 years and beyond. That’s why NCUA is constantly on the lookout for threats to credit unions—both inside and out.
Risks on the Horizon
Today, I want to talk about the two most significant threats to safety and soundness, and how we, together, can confront them. Specifically, I want to focus on cybersecurity and interest rate risk. I also want to update you on our approach to regulation, and discuss why it’s necessary to modernize risk-based capital standards.
First, those of you who read our 2014 Supervisory Letter know that one of our top exam priorities is cybersecurity. Examiners are looking to see how credit unions are implementing risk-mitigation controls to better protect, detect, and recover from cyber-attacks. This is part of a nationwide effort to safeguard our systems and protect against attacks by cyber-terrorists, as well as hackers who are after cash in your members’ accounts.
I encourage all of you to get educated and share best practices with each other. Also, I urge you to take full advantage of the resources on our special cybersecurity resources webpage at NCUA.gov.
Cybersecurity is an urgent challenge not only for credit unions, but for the entire financial services industry. And like so many of the collective challenges facing the industry, the chain is only as strong as its weakest link.