Thank you so much. It’s really wonderful to be back with you again.
Yesterday, I was proud to have the opportunity to recognize all New Hampshire credit unions for their commitment to helping everyone in their state achieve the American dream. And I enjoyed talking with so many of you at yesterday’s NCUA Board reception.
I’d like to thank Dan Mica and CUNA’s regulatory team, led by Eric Richard and Mary Dunn, for giving me many opportunities to hear credit union perspectives during the GAC and throughout the year.
Whether here in the D.C. area or in your home states, I enjoy meeting with representatives of all types of credit unions.
In my conversations with credit union officials, I am often impressed by the innovative programs their credit unions offer. For example, at more and more credit unions:
• World-class financial education programs are teaching members of all ages to make life-changing choices and become smarter consumers.
• Multicultural outreach programs are attracting new members from different ethnic groups, diversifying the membership base and strengthening safety & soundness.
• And risk-based lending programs are raising loan approval rates and providing reasonably priced credit to all types of borrowers.
In the past year I have emphasized that programs like these are not just the right thing to do; they’re good business.
This year I believe these programs are even more important to credit unions’ bottom line. I believe they are the best defense against taxation.
And this year’s GAC theme: “50 Stars, One Future,” illustrates perfectly why I feel this way.
The “50 Stars” represent each of your states. Yet the reputation of each credit union stretches well beyond your state – all the way to Washington, D.C.
When your credit union provides innovative programs to serve members in your state, these members are constituents of federal lawmakers, as well. And when your credit unions reach constituents who are not served by other insured institutions, they can help convince lawmakers everywhere that credit unions deserve to keep their tax exemption.
So you have the power to determine the future of your credit union, and the future of the credit union community.
I wish I could tell you that since you were successful in preventing taxation last year, you won’t be threatened again in the future.
But taxation is contagious. If taxes are imposed on credit unions in one state, lawmakers may impose taxes on credit unions in other states. If state charters are taxed, lawmakers may consider taxes on federal charters. And if large credit unions are taxed, it will be only a matter of time before all credit unions are taxed.
From my perspective as a regulator, maintaining credit unions’ tax exemption is critical to protecting safety & soundness. If credit unions are taxed, the taxes will cut into retained earnings. Even credit unions that are healthy today, under that scenario, could face Prompt Corrective Action.
Without any other source of capital, if credit unions are taxed, they would probably not have the net worth to offer needed new services or to branch out into underserved areas. As a result, credit unions would be unable to serve the very people who need them the most.
Credit unions’ cooperative structure is one key reason for their tax exemption. But it is not the only reason.
Several other cooperatives are taxed. In fact, some cooperatives are taxed according to the people they serve and services they provide. Therefore some lawmakers are asking, “Why shouldn’t credit unions be taxed?”
So I also try to look at the tax issue from a lawmaker’s perspective:
To make sound public policy, lawmakers weigh any group’s tax exemption against the public good. Many lawmakers know that credit unions serve the public good by filling a void left by other financial institutions. These lawmakers need to hear what credit unions are doing to help their constituents.
So when you reach out to everyone in your field of membership – including new immigrants, students, members of the military, single mothers, small business owners, senior citizens, renters, and other people with low-to-moderate incomes – you give lawmakers more reasons to preserve your tax exemption.
As many of you know, one year ago, right here at CUNA’s GAC, I launched the initiative that I call PALS – Partnering and Leadership Successes.
In introducing PALS, I noted that many credit unions were spending a great deal of their hard-earned resources to develop new approaches and new tools that would appeal to a more diverse field of membership. Then they were spending more money on top of that to market to different socio-economic groups than they had in the past.
Yet despite all of their admirable efforts, some credit union officials had told me that they were getting very little return on their investment and they weren’t sure how to proceed.
Well, what a difference a year makes! The first year of PALS has been more successful than I ever could have imagined. Credit union leaders have come from all over the country to PALS workshops to share successful solutions to real-life problems.
Their best practices have inspired other credit union leaders to offer innovative programs they may not have considered before – programs that have proven effective in reaching the people who need credit unions the most.
As I mentioned last year, PALS is my contribution to Chairman Dollar’s Access Across America initiative – which has now helped 64 million more Americans become eligible for credit union membership. PALS is focused on helping credit unions turn those potential members into real members.
I’d like to take this opportunity to thank Chairman Dollar for his unwavering support of PALS. I’d also like to thank CUNA and the state credit union leagues that have encouraged credit unions to participate in PALS. From day one, they recognized that PALS workshops present an opportunity for credit unions to grow stronger by working together.
To encourage this, 13 leagues, CUNA and NAFCU joined NCUA in co-hosting free PALS workshops around the country to share credit unions’ best practices.
Our shared experience has confirmed that the credit union community is a community in every sense of the word. Credit unions share common interests, want the best for each other, and interact for a common purpose: to do everything in their collective power to provide outstanding quality service to their members.
The first year of PALS workshops focused on several innovative ways to serve
more members:
* Forging affordable housing partnerships,
* Connecting with Latinos,
* Making member business loans,
* and offering alternatives to predatory lending.
But it’s not just the topics of these workshops that make them innovative. It’s the networking. In each PALS workshop, you can walk around the room and see credit union officials sharing with each other -- exchanging innovative ideas to reach new members.
It’s a truly wonderful experience to see credit unions’ cooperative spirit come alive. At a PALS workshop, credit unions are not placed into peer groups by charter or asset size. Everyone is a peer. Officials from federal and state credit unions, from large and small credit unions, from SEG and community charters, are all invited to work together. Everyone is welcome to contribute.
I have been encouraged – and even overwhelmed – by the enthusiasm shown by credit union leaders. Each PALS workshop has been larger than the last. And the most recent workshops, on member business lending and alternatives to predatory lending, were filled to capacity.
In our first year, almost 700 people attended PALS workshops.
But PALS is about so much more than numbers. It’s taking the credit union philosophy of “People Helping People” to the next level. It’s about “Credit Unions Helping Credit Unions.”
There’s such enthusiasm about this concept that my office is getting calls almost every day from credit union people suggesting topics and locations for future workshops.
I invite all of you – CEOs, staff and volunteers – to attend a PALS workshop this year.
The next workshop, on March 25 in San Francisco, will focus on ways to build valuable relationships with small business owners in your field of membership.
Back by popular demand, this member business lending workshop is designed to reach those of you who could not attend last year’s sold-out workshop here in Washington.
With Vice Chair JoAnn Johnson joining me, this workshop will provide an opportunity to learn about the major changes in our member business lending regulation and to see how credit unions put together sound business lending programs that serve a unique niche.
You may be surprised to learn that nearly half of all credit union business loans serve small business owners with low-to-moderate incomes. These loans are helping credit unions revitalize their communities, one micro-enterprise at a time.
On June 2, we will hold a workshop in Boston. It will focus on home mortgages -- probably the most significant financial transaction your members will ever make.
For current renters in your field of membership, their first home will be their most valuable asset.
For young members, an affordable first home will be the key to financial stability. It will insulate them from rent hikes. It will empower them to build equity they can use to educate their children or start a business.
For older members, their home will open a gateway to a comfortable retirement, and serve as a valuable asset to pass on to future generations.
Providing home mortgages is critical in terms of serving everyone in your field of membership:
Although 67% of credit unions make mortgages, only 2% of all mortgages are made by credit unions. That means your members are going elsewhere for their mortgage loans.
Unfortunately, a growing percentage of your members may be going to subprime lenders. While credit unions for many years have held steady with their 2% share of all mortgage originations, subprime lenders have grown to 13% of all mortgage originations.
The June 2 PALS workshop on “How to Make More Mortgages” is an opportunity to build your members’ wealth and build loyalty to your credit union.
And every PALS workshop is an opportunity to recharge your creative energy, and meet colleagues who are dealing with the same real-life issues you are facing.
I know that you all have busy schedules and that you will not be able to attend every PALS workshop. So I am making every effort to present information from PALS workshops that you can use without having to leave your office.
For the past several months, I have been working on an exciting new initiative to make it possible for all credit unions to benefit from the networking opportunities that PALS has to offer – even if they are unable to attend a workshop.
My ultimate vision was to develop a Best Practices Website – so that credit union officials would be just two clicks away from learning about the innovative programs their peers are using to successfully reach more potential members.
Today, that vision becomes a reality! I am proud to unveil, on the screens here in front of you, the new PALS Best Practices Website!
To access this new site, just start with the NCUA website, click PALS, then click Best Practices! Here it is, for the very first time!
This home page features ideas designed to pique your interest. Best practices are organized into 10 major program categories – from Community Partnerships, to Predatory Lending Alternatives, and many other services that have enriched the lives of credit union members across America.
In bullet points under the major program categories, there are more than fifty different types of innovative programs.
So, for example, if you want to see how credit unions are educating the next generation of members by setting up branches in schools, you would look under Financial Education, then click In-School Branches.
Whenever you click beside a bullet point, you will see a list of credit unions that have shared their ideas on successful programs in your area of interest.
For each program type, the credit unions are sorted by state, to make it easy to find the credit union closest to you.
Now to view a quick synopsis of each credit union’s programs, just click on a Program Description.
Here I will click the program description for Apple Federal Credit Union in Fairfax, Virginia, which is closest to home for me. This is the credit union that has set up a branch in my son’s high school!
As you can see, these program descriptions are brief, to the point, and easy to understand.
As you explore this website, I hope it will motivate you to contact your peers — and I hope they will inspire you to give their program a try.
If you were interested in learning more about how this credit union put together its unique program, you would first click the arrow to go back to the list of credit unions with in-school branches.
Then simply click the name of the credit union from which you want more information.
For each credit union listed on the site, we have put together an Initiatives page. This gives you their contact information and web address, so you can e-mail or call to chat with the person in charge of each program.
If a credit union has more than one initiative on the PALS Best Practices Website – like Alternatives Federal Credit Union, which has so many wonderful programs – their Initiatives page will show links to all of their initiatives on the right-hand side.
On the bottom left of each Initiatives page is a link from each credit union’s charter number. Clicking on any charter number will take you to another informative page.
At a glance, this charter snapshot shows the credit union’s asset size, number of members, peer group number, and other relevant financial information, so you can compare that credit union’s resources to yours. It also includes the name of the credit union’s CEO, so you can call and find out how the program has helped the credit union better serve its members.
This entire site is designed to help busy credit union officials quickly navigate through hundreds of outstanding programs.
As I launch this site today, it features nearly 150 credit unions, with descriptions of nearly 300 best practices.
But this is just the beginning. Now that NCUA has developed this site, we hope to build on it every day. In fact, this will always be a work in progress. There is no limit on new ideas.
As long as credit unions continue offering innovative ways to reach new members, we will be looking to add new categories, new programs, and new credit unions to the site.
And while we’ve titled the site “Best Practices,” let me assure you: We will not judge or critique any of the entries. If you send it, we will post it.
So if your credit union has a program that you are proud of and your colleagues might be interested in, please make your voice heard. We will gladly feature your program on the Best Practices site to share with your peers.
How do you include your credit union on this site? It’s easy.
Just send me an e-mail with:
* the name of your credit union;
* the name of each innovative program;
* a brief description of each program;
* a contact person for each program;
* and their phone number.
And remember: The program descriptions do not have to be lengthy at all. All we are looking for is enough of a description to encourage others to contact your credit union and learn more.
We are certainly not looking to create any more work for you. But I would like to give you an opportunity to gain recognition for the good work you are already doing, and to share your ideas with other credit union leaders.
I thank each of you who have contributed ideas to launch this site. I invite the rest of you to add your programs to this site. And, I encourage all of you to use this site to learn about other innovative programs.
In the future, you can prove that there are far more than 50 stars in the credit union universe. I believe there are thousands of stars. Every credit union that helps people break out of a desperate cycle of debt, and build wealth to enrich their lives, is a star to the members who look up to them. If your credit union is offering even one of these innovative programs, you are a star as well.
I want to give all of you an opportunity to shine. When you share your light of inspiration with others, the “One Future” for America’s credit unions will be as bright as your ideas.
It’s always a pleasure to be here, and I thank you for this opportunity.