Issues to Be Tackled in 2017

by J. Mark McWatters, NCUA Board Member

As we approach the new year, with a new administration and Congress soon in office, it is a good time to reflect on the range of positive changes Chairman Metsger and I have been able to advance in the last several months. The tone a chairman sets can enable an agency to move forward or become stagnant. I appreciate the professional approach the Chairman has taken to work with me to pursue our objectives for NCUA and to facilitate credit unions’ ability to serve their members.

Enhanced communication between our offices has enabled us to propose, adopt and execute a number of changes that are designed to strengthen credit unions and improve the efficiency of the agency. These important changes include:

  • A final rule on field of membership for federal credit unions that is consistent with the Federal Credit Union Act and removes artificial impediments to growth and should make it easier for potential members to join.
  • A proposed field-of-membership rule to consider whether the 2.5 million population cap on federal community charters and expansions should be raised to 10 million and whether community charter applications could be based generally on a narrative approach. The comment period for this closed on Dec. 9.
  • A briefing on the issues that must be considered when using supplemental capital to help meet NCUA’s risk-based capital requirements, in anticipation of an advance notice of proposed rulemaking planned for early next year.
  • A hearing on the agency’s 2017—2018 budget and related issues.
  • A review of the agency’s examination processes and procedures.
  • A review of credit union financial performance reporting and what changes could be made to improve the Call Report.

These initiatives have been well received, but there is more work that needs to be done to improve operations at NCUA and to allow well-managed credit unions greater flexibility consistent with the principles of safety and soundness.

Working collaboratively, here are some of the items the Board could pursue:

  • Determine if the risk-based capital rule, as adopted, should be revisited.
  • Reevaluate the stress-testing rule and program for the credit unions with more than $10 billion in assets.
  • Consider additional items the agency could pursue to help small credit unions better serve their members.
  • Examine what additional steps the agency could take on examiner training so that examinations are done uniformly throughout the regions.
  • Develop an improved examination-appeals process.
  • Explore the benefit of NCUA establishing a Credit Union Advisory Council to hear directly from credit unions as we identify problems and create solutions.
  • Revisit the corporate credit union rule.
  • Determine what other rules should be reviewed to provide meaningful regulatory relief.
  • Review NCUA’s cybersecurity protocols and educate credit unions on how to address this growing issue.
  • Facilitate discussions with the credit union system to determine if we are on the right track to manage inevitable interest rate changes.
  • Work with credit unions to ensure they take advantage of advances in technology and payments.
  • Study what NCUA should be doing to address fraud at credit unions, which may be small in scope relative to the entire system, but is an ongoing issue.
  • Play a greater role in working with other agencies and the Financial Accounting Standards Board to ensure credit union differences are not discounted in their rules.
  • Work with state regulators to enhance the dual-chartering system.
  • Ensure the agency’s priorities align with its budget expenditures through even greater transparency.
  • Work with Congress on ways to update the Federal Credit Union Act to facilitate credit union operations and growth.
  • Draft a strategy for resolving the legacy assets from the corporate resolution program.
  • Evaluate if NCUA’s strategic priorities match those prescribed in the Federal Credit Union Act and the agency’s rules and regulations.

With the overall health of the credit union system stronger than ever, and with an ever-changing financial marketplace, these are some areas that the Board could consider to help ensure the forward progress that NCUA and the credit union system have made continues.

With your help, I look forward to tackling these and other issues of importance in 2017.