As Prepared for Delivery.
Thank you very much. It’s a pleasure to join you today and to have the opportunity to visit with so many leaders in our industry. But I’m also pleased to be here for a more personal reason — because this is my home.
Charlotte is where I was reared and educated, where I learned the values of community, responsibility, service, and compassion that have guided my personal and professional lives. I went to college just a couple of hours up the road in Chapel Hill. Right after that, I came back here to start my career in financial services — in fact, at what is now Bank of America, literally right across the street from this building.
If you had told me back then, at age 22, that a couple of decades later I would come back here as the chair of a federal financial regulatory agency, I wouldn’t have believed you.
But then again, there’s an awful lot in my career path that was a surprise even to me.
You see, I did not set out to dedicate my work life to financial services. In fact, my first career choice, stemming from my time spent working as a church missionary in Africa, was to enter the ministry.
As it turned out, God had other plans for me. But that call to service I felt as a young man did point the way toward my future path. Once I embarked on my banking career, I always saw our primary mission in simple terms: It was about people helping people and people serving people.
When I made that fundamental connection, I realized that there was very little distance between missionary work and the mission of finance. The connection between the two was service to others.
That was what steered me into my work in community banking — providing services to, and advocating for, the needs of underserved communities. In fact, that’s what I did in my first job across the street, all those years ago, as a Community Reinvestment Act manager.
In that job, I oversaw loan programs and worked on affordable housing and small business lending. Now let’s be clear: when it comes to the financial services industry, CRA manager probably wasn’t the straightest route to the corner office. If that had been my goal, I should have taken another path.
But it was deeply rewarding work because it gave me an opportunity to work alongside some outstanding leaders on important issues like affordable housing and small business lending. I knew we were making a powerful difference in serving many underserved communities that needed a helping hand.
I share that personal story for a reason: because I believe, my path tells you something about where I come from, how I view the credit union system’s mission of service to your members and communities, and how I approach my job as a regulator.
We often think the regulator’s role, the oversight role, as being adversarial toward the industry. There is some truth in that, particularly on those occasions where an industry actor falls down on the job or fails to live up to their responsibilities.
But I believe there’s an important place for regulators to support and encourage the industry where it’s appropriate. I’m interested in what we can do to recognize and incentivize what’s best in the credit union mission.
Whether it’s helping families achieve the dream of homeownership; supporting entrepreneurs in launching small businesses; or providing the essential financial services to help low- and moderate-income families save for their future, you are on the front lines of responding to the needs of your communities every day.
That commitment to service, that commitment to “people helping people,” guides all of us. And it’s the core value I bring with me to the National Credit Union Administration.
With that as an introduction, I’d like to talk today about my priorities at NCUA. I was sworn in as Chairman just in April. But as you know, it’s not my first time on the Board — I served previously from 2005 to 2009. I believe that previous experience, along with the industry and life experiences, give me insight to do my level best to serve the NCUA.
Regulatory Reform: Effective, but not Excessive
First, as a regulator, I understand how important rules are to create confidence, fairness, and accountability. Regulation is vitally important to ensure the safety and soundness of the credit union system. That’s why I want to see a regulatory system that is effective, but not excessive.
It goes without saying that we must uphold the highest standards of integrity, accountability, and transparency. It’s safe to say that every one of us in this room today agrees with those principles.
But we also have to be realistic about regulatory and compliance burdens and be attentive to ways in which we can relieve those burdens, when and where it makes sense. Your institutions are competing in a dynamic and changing marketplace — but what I hear from people in the credit union system is that outmoded regulations can pose a real challenge to your institutions.
The NCUA has been working steadily to modernize our regulatory system. That means modifying, updating, or in some cases, eliminating regulations that no longer fit a changing financial system. We want to create a more responsive system that will encourage innovation, provide flexibility, and fulfill our primary mission of protecting safety and soundness.
For example, in just the last few months, we have taken steps to increase the threshold on appraisal requirements for commercial property from $250,000 to $1 million. This is an overdue reform that we hope will reduce transaction costs and spur more lending, particularly in hard-pressed rural areas. We also have proposed delaying the risk-based capital rule for two years, so that we can be sure the rule will be implemented properly and that we take a holistic approach to the issue of capital in credit union system. In each case, we’re trying to take prudent steps to balance the needs of the industry, the needs of your members, and the realities of the financial system as a whole.
Let’s be clear: The goal is not to simply get rid of regulations for the sake of getting rid of regulations. The goal is to create a regulatory system that is effective, but not excessive so you can go about your vital work of lending and providing your members with the highest level of service and quality, affordable financial products.
I have also made it a priority to encourage expanded employment opportunities for people who were convicted of minor crimes in their past, but have now paid their debt to society and are seeking a new path forward. This effort builds upon the First Step Act, which was signed into law last year by President Trump after being passed by Congress with strong bipartisan support.
As you can imagine with all these reforms, we probably won’t be able to satisfy everyone all the time — it’s a balancing act. We have a variety of opinions on our board alone, and I appreciate the diversity of thought and insight that my colleagues bring to the table.
But we share a common outlook: we all want the credit union system to grow, to thrive, and to continue serving your members and your communities while continuing to ensure the confidence and accountability that come from smart, effective regulation.
Innovation: Challenges and Opportunities
Second, I want to do what I can to steer the industry in the right direction when it comes to innovation. You are all well aware of the challenges the financial industry is facing right now. You’re dealing with them every day.
Cybersecurity is a significant concern. The news of the massive data breach at Capital One just a few days ago is a sobering reminder that even the largest and strongest financial institutions have points of vulnerability.
Cybersecurity has been one of NCUA’s supervisory priorities for several years now, and it will remain a top priority for the agency during my chairmanship. I recently appointed a cybersecurity advisor who reports directly to me.
On the other side of the ledger, the financial technology sector is also creating a different type of challenge in the form of new ways of doing business and new customer expectations.
The fintech sector is growing and sending a clear message to the financial industry that “business as usual” may not always be a viable business model. It’s important that we plan and prepare for those changes — because they’re here, and there’s more on the way.
We can go down the list: mobile banking, digital payments, artificial intelligence, data aggregation, or whatever may come next. We know these trends are going to change the way you engage with your members, the way you analyze lending risk, and the way you market and deliver your products and services. You’re certainly not alone in facing these challenges; these technological changes are creating challenges for regulators, as well. So we need to be prepared.
What I want to emphasize when I talk about these challenges is that we should not approach them as things to be feared or avoided –— but as opportunities to serve your members, your employees and your communities even more effectively.
Yes, the threat of a data breach is a real and scary thing. But it’s also an opportunity to focus on improving security practices and providing the highest level of protection to your members’ assets and data.
And yes, the rise of fintech may seem daunting and disorienting, especially for those of us who came up through the industry in an earlier era. But, it also creates an outstanding opportunity to improve customer service, to expand access to affordable financial services, to offer new types of financial products, and to support your community in new ways.
Diversity and Inclusion: Preparing for Change
Finally, I’m very much focused on the issues of diversity and inclusion that are changing the world around us. This is a time of seismic change: We know that the United States is experiencing a period of rapid and unprecedented demographic transition. And again, that dynamic creates both challenges and opportunities.
One thing that has impressed me is how the financial industry as a whole has played a leading role in stepping up to respond to that change in a positive and constructive way.
I believe credit unions are better positioned than any other player in the financial sector to make a big difference when it comes to diversity and inclusion. That’s because diversity and inclusion are a fundamental part of our industry’s history.
From their beginning, credit unions were intended to serve people of modest means who had been overlooked by traditional banks. From their very beginning, credit unions have helped to foster greater financial inclusion, accessibility, and opportunity for all Americans. I expect that to continue in our current era of demographic and economic transition.
At the NCUA, we’re always looking for ways we can support you in that mission. One tool at our disposal is the low-income designation for qualified credit unions, which has been one of the industry’s greatest success stories of the last three decades.
Just look at the numbers: In 1990, there were only 184 of these credit unions in the United States, so their growth has been remarkable. We now have more than 2,500 low-income-designated credit unions across the country. Having this designation means, they are eligible to receive grants and loans from the Community Development Revolving Loan Fund, and they have expanded options for business lending and secondary capital.
These low-income institutions are helping working families in some of the nation’s most underserved communities to improve their financial standing. We should continue to encourage this important work.
Likewise, we have a program in place to support the more than 500 credit unions that are minority depository institutions. These credit unions serve the financial needs of people and communities that have been long overlooked, and they bring significant value to their members and those communities.
We also want to encourage the industry to continue offering different types of financial products that serve your members more effectively, and to find new ways to offer financial capability counseling to help low- and moderate-income families improve their financial position.
In fact, just last month, I had the chance to visit the Destinations Credit Union in Parkville, Maryland, where they launched a new partnership with Operation HOPE to offer financial counseling services in their branch. I’d love to see similar initiatives in credit unions throughout the country. These are the types of creative solutions we should be embracing one community at a time.
That’s just one example, but all of these will be important steps that the NCUA and the industry can take together to expand opportunity and create shared prosperity in underserved communities.
I’ll also emphasize that the NCUA takes this issue just as seriously as you do. We’re very much focused on promoting diversity and inclusion in our own agency because we know we have to “walk the walk” if we expect others to follow our lead.
This is much more than just a good business practice; I consider financial inclusion to be the civil rights issue of our time. For too long, too many people have been overlooked or locked out of the financial system — and we know that the lack of access to affordable banking and lending services holds working families back from climbing the financial ladder. We need to remove the obstacles these Americans face. That’s a goal I look forward to achieving with you.
This is not an exhaustive account of where we’re going. But it does reflect the priorities that are at the top of my mind in these opening months of my chairmanship. I very much look forward to future visits with you all, where I can update you on the progress on these and other priorities.
In June, we celebrated the 85th anniversary of President Franklin Roosevelt’s signing of the Federal Credit Union Act. In just 85 years, this industry has grown rapidly, and now serves 117 million members and holds assets of more than $1.5 trillion. That’s an outstanding success story.
Our challenge now is to determine the best ways to keep that success going. The priorities I’ve outlined here today — effective regulation, a forward-looking approach to innovation, and financial inclusion to better serve a changing population and economy —are a great place to start.
But more fundamentally, the key to this industry’s future success lies with staying true to the values the credit union system was founded upon, and where I began my remarks today: the commitment to people helping people by fostering greater financial inclusion, accessibility, and opportunity for all Americans. I look forward to working with you to advance that worthy mission. Thank you very much.