ALEXANDRIA, Va. (Aug. 9, 2018) – Minority credit unions play a vital role in providing affordable financial services in the nation’s most underserved communities and the agency is looking at new ways to support them, NCUA Board Chairman J. Mark McWatters said today.
“Unfortunately, minority credit unions are too often the only federally insured financial institution available in rural and urban communities that have been historically unserved by traditional financial institutions,” McWatters said. “Their presence in these communities provides an alternative to actors that engage in unfair practices at the expense of consumers. It’s that commitment to serve that makes minority credit unions the embodiment of the credit union philosophy of people helping people.”
McWatters spoke today before more than 300 attendees at the African-American Credit Union Coalition’s Annual Meeting in Atlanta, Georgia.
As of the end of the first quarter of 2018, there were 564 credit unions classified as minority depository institutions, accounting for 10 percent of all federally insured credit unions. Collectively, these credit unions had more than 4.3 million members and $42 billion in assets.
McWatters noted that minority credit unions face a number of challenges such as competitive pressure from alternative financial service providers, the lack of adequate resources, higher delinquency rates, and the inability to take advantage of economies of scale. He added that the NCUA has resources available through its Office of Credit Union Resources and Expansion to help minority credit unions grow and provide new products and services.
“The NCUA has a statutory obligation to preserve minority depository institutions and encourage the creation of new ones, and it is one that we take seriously,” McWatters said. “The agency is exploring additional ways it can provide minority credit unions with support through training, grants and other initiatives. Recent regulatory changes like those to our field-of-membership rules will also provide these credit unions with new and better opportunities for growth.”
McWatters added that the NCUA Board is considering additional ways to modernize the regulatory structure to give credit unions the flexibility they need to compete, while still maintaining safety and soundness. The 2017 advanced notice of proposed rulemaking on alternative capital and the recent proposal to provide additional payday alternative loan options are two examples of the regulatory changes being considered that could assist minority credit unions in meeting the needs of their communities, he said.
Finally, McWatters stressed the continued need for women and minorities to have greater representation on credit union boards.
“The demographics of the country and credit union members are changing. For credit unions to remain in touch with their members and true to their mission of service, greater representation of women and minorities is essential,” McWatters said. “I encourage the credit union community to address this issue aggressively and to look for ways to invite more women and minorities into the boardroom and positions of leadership. It is the right thing to do, and it is long overdue.”
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share
Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of
state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.