Vice Chairman Hood Urges Credit Union
Leaders to be Pro-Active
Alexandria, VA, September 19, 2006 – National Credit Union Administration (NCUA) Vice Chairman Rodney E. Hood emphasized his key priorities before an audience of over 400 guests gathered at the NAFCU’s Annual Congressional Caucus in Washington D.C.
Among his priorities, Mr. Hood focused on:
- Data Security – Vice Chairman Hood stated that as credit unions expand credit card and ATM services to their members, the security of financial data will be essential to maintaining consumer confidence. “If identity theft continues to occur at this rate, credit unions may no longer be able to offer these valuable services to their members,” said Vice Chairman Hood. “Credit unions need to remain diligent in the pursuit and implementation of the best methods to protect their members, and as you conduct financial education, you should prioritize data security so your members remain informed and vigilant in this effort.” Hood recalled his recent visit with agents of the United States Secret Service (USSS) to share ideas and best practices about how best to protect citizens’ financial data. “I am committed to working hard with our partners in the federal government and private sector to address data security and credit card fraud so that the health of America’s credit union system remains strong and vibrant. Overcoming data security threats will truly require credit unions to cooperate with the stakeholders in the financial services arena in order to continue serving as a reliable financial partner to their members.
- Predatory Lending –Vice Chairman Hood stressed the importance of protecting credit union members from predatory lending and recalled his visits with Department of Defense officials to discuss partnership opportunities and best practices which will protect service members from predatory products. “In order to bring more and more people from their communities into the financial mainstream, credit unions must not allow their members to fall victim to predatory lending and should find alternatives to usurious loans with pre-payment penalties.”
- Member Business Lending – As small businesses continue to flourish across America, Vice Chairman Hood encouraged the audience to promote this growth by expanding business lending services to their members. “Credit unions play a pivotal role in helping to foster what President Bush calls the ‘ownership society.’ Credit unions should encourage the entrepreneurial spirit of their members. Therefore, no cap should be placed on your ability to meet the needs of your members.” Hood also encouraged credit unions to explore the programs and services offered by federal agencies such as U.S.D.A., S.B.A, and corporate credit unions.
- Open Communication – “As your regulator, it is essential to maintain open lines of communication with those I serve. I truly value your comments and feedback about the issues that matter most to you and your members,” said Hood as he recalled his participation in CEO roundtable meetings with Members of Congress which created an open forum providing stakeholders the opportunity to ask questions and give feedback.
Mr. Hood also informed the audience of the upcoming Risk Mitigation Summit which he will be hosting at the U.S. Chamber of Commerce on January 11, 2006. The Summit will gather leaders from the U.S. Department of Treasury, Federal Reserve System, Corporate Credit Unions, and others from the financial services community to discuss the latest trends in risk management and analysis. “I look forward to hosting the upcoming Risk Mitigation Summit. I appreciate the hospitality of the U.S. Chamber of Commerce and I am encouraged by the widespread interest generated within our partners in the federal government and private sector to contribute to the success of this Summit. I am determined to host an event which will empower the credit union system for years to come.”
During his remarks, Vice Chairman Hood also summarized three main areas of his regulatory philosophy:
- Effective, not excessive regulation – Vice Chairman Hood emphasized the importance of maintaining a regulatory environment that is flexible, yet ensures safety and soundness. “You need the regulatory empowerment and flexibility to effectively serve your members.” Hood commended the NCUA Board’s decision to reduce the reg-flex net worth ratio from 9% to 7%, and stated that well-capitalized and well-managed credit unions should not be subject to “micromanagement from NCUA.”
- Risk management, not risk avoidance – "Credit unions are pivotal in strengthening America’s economy because they are so effective in providing access to credit and capital, while maintaining effective risk management of their portfolios.” Hood also stressed the importance of NCUA’s continued innovation in examining and approving new products and investment pilot programs.
- Credit unions must stand firm to the banking lobby– Mr. Hood encouraged the audience not to retreat in the wake of attacks from the banking industry, but rather continue to serve hard working Americans by approving field of membership expansions such as community charters when the applications are in compliance with federal statutes and NCUA guidelines. “We have approved expansions at the Board and Regional level, and we eagerly await more. I am amazed at the number of people who ask if we are still approving expansions and the answer is Yes!”
Vice Chairman Hood concluded his remarks by recalling the ideals upon which credit unions were founded and thanked those in the credit union system for strengthening the economy while helping their members achieve the American dream. “Many decades have passed since Edward Filene and an innovative and compassionate group of American pioneers boldly set a course based on the principle, ‘not for profit, not for charity, but for service. As time goes on, I am encouraged by the course credit unions continue to chart by embodying the ‘People Helping People’ philosophy. As you help your members navigate the rough seas of financial uncertainty and despair to arrive at the safe shores of financial empowerment and hope, I am committed to joining you on this journey.”
The National Credit Union Administration is the independent federal agency that regulates, charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 85 million account holders in all federal credit unions and the majority of state-chartered credit unions.
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