NCUA CHAIRMAN JOHNSON HIGHLIGHTS 2004 ACCOMPLISHMENTS AND OUTLINES 2005 AGENDA
Chairman Johnson Calls 2004 “A Year of Safety and Soundness and
Economic Empowerment” And Says She Looks Forward to 2005
“Pursuing Risk-Based Capital for All Credit Unions and Enhanced Regulatory Flexibility”
Orlando, FL, January 28, 2005 – Addressing the National Association of Federal Credit Unions’ CEO Conference, National Credit Union Administration (NCUA) Chairman JoAnn Johnson said 2004 was a “very successful and productive year” for NCUA and America’s credit unions.
Chairman Johnson highlighted a “year of significant progress” in 2004, which accomplished the following:
- Credit union financial and management performance remained strong with growing assets and increased dollars of net worth;
- NCUA held the fourth open budget briefing and public forum – continuing greater openness of NCUA budgetary decision-making to the stakeholders;
- Adopted a 2005 Budget of $148 million, a 1.29 percent decrease from the 2004 budget. The Board also voted to refund $9 million to federal credit unions from excess cash reserves and to reduce the overhead transfer rate to 57 percent;
- The NCUA Chairman testified before the Senate Committee on Banking, Housing, and Urban Affairs regarding the Condition of the Banking and Credit Union Industry; also, regarding the Bank Secrecy Act. Before the House Financial Services and Consumer Credit Subcommittee, Chairman Johnson testified regarding regulatory relief and improvements for credit unions;
- The NCUA Chairman was appointed to the U.S. Financial Education and Literacy Commission; NCUA is a key partner with the Treasury Department on financial education initiatives;
- Federal credit unions continued the record pace to reach out to those left behind without affordable financial service in moderate and low-income communities across the country with over 27.4 million potential new credit union members added in 2004. Last year, 139 credit unions adopted 240 underserved areas. According to NCUA data, credit unions that have adopted underserved areas grow 123% faster than the national average of all federal credit unions;
- NCUA granted over $1.2 million in technical assistance grants (TAGs) for credit unions to enhance technology, homeownership assistance, financial education, individual development accounts, expanding service to the underserved, international remittance, student internships, volunteer income tax assistance, officer and staff training and mentoring;
- Recognizing the uniqueness of America’s community development credit unions (CDCUS) and the challenges for the fledging low-income institutions, Chairman Johnson organized individuals comprised of NCUA staff and community development credit union leaders to discuss operational and examination issues which will result in a white paper to be utilized by examination teams for CDCUs;
- NCUA hosted three Access Across America Economic Empowerment Summits across the nation attracting Cabinet and senior government officials as keynote presenters;
- NCUA joined with House Financial Services Committee Chairman Michael Oxley and Treasury Secretary John Snow in an Ohio Credit Union Forum;
- The Board issued final amendments to the Member Business Lending rule enabling credit unions subject to the rule to more fully participate in Small Business Administration guaranteed loans. As a result, there are nearly 200 credit unions participating in the Small Business Administration’s 7(a) loan program as of December 31. According to SBA data, credit unions have increased nearly 50% over the previous year in the 7(a) loan program;
- Held a Summit on Credit Union Capital at the agency with credit union officials gathered from across the nation. The forum covered issues relating to the impact of capital and prompt corrective action for natural person credit unions and capital issues relating to the corporate credit union system; and
- As a result of the summit, Chairman Johnson proposed lowering the RegFlex qualifying net worth ratio from 9% to 7% for well-managed, well-capitalized natural person credit unions. Second, for well-managed, highly-rated low-income credit unions, provide the option for the credit union to release the portion of a secondary capital account that no longer counts as net worth. Third, pursue risk-based capital for the corporate credit union system.
Chairman Johnson said among her priorities in 2005, is to “produce significant, meaningful improvements relating to capital for all credit unions.” “While we will build on last year’s successes, we must keep a keen focus and not waver on producing results in modernizing regulations relating to capital standard for credit unions,” said Chairman Johnson. The Chairman announced the following key priorities for 2005:
- Pursue risk-based capital through statutory change in Congress for natural person credit unions;
- Propose a rule before the NCUA Board which would allow risk-based capital for the corporate credit union system, lower the RegFlex qualifying net worth ratio from 9% to 7% for well-managed, well-capitalized natural person credit unions, and also for well-managed, highly-rated low-income credit unions, provide the option for the credit union to release the portion of a secondary capital account that no longer counts as net worth;
- Continue “wise use of agency resources” in the budget and allocation of resources as part of the Accountability In Management (AIM) initiative for greater efficiency, as well as long-term strategic planning for the agency;
- Continue to enhance a safe and sound federal credit union charter and share insurance fund;
- Continue to support regulatory improvements before Congress and enhance the agency’s position on Capitol Hill, as well as with other financial regulatory agencies at the federal and state levels;
- Expand the agency’s Access Across America initiative to broaden the agency’s partnerships and continue to promote the federal partnerships available to credit unions as they seek to serve Americans from all walks of life;
- Continue to review and update where necessary the community development credit union rules, low-income designation regulations and other pertinent regulations designed to encourage the establishment and long-term financial viability of community development and low-income credit unions; and
- Continue to encourage safe and sound credit unions to consider providing member business lending services so members may have greater access to capital for their members’ small businesses.
“While these are my priorities, I am sure there will be additional issues well into the year which we will evaluate,” said Chairman Johnson. “However, I believe we are focused on an agenda that will modernize regulations and enhance credit union service. I want to reiterate that it is essential to address capital issues for credit unions as it affects the long-term financial viability of the institutions. Since joining the NCUA Board, my foremost priority has and will remain safety and soundness for the credit unions we regulate and insure. Also, it is imperative that NCUA provides regulatory flexibility to strengthen the institutions and enhance member service.”
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