Remarks as Prepared for Delivery on October 28, 2019
Thank you very much for that kind introduction. It’s a pleasure to welcome everyone to the 2019 REACH Conference.
I want to add my congratulations to the industry leaders here who were honored at the awards ceremony earlier for their professional achievements, volunteer activities, and community service. You are an inspiration.
The work for which you’ve been honored is very much in the credit union tradition of “people helping people.” We’ve all heard that slogan — “people helping people” — and in fact it’s become something of a mantra for me whenever I’m speaking to industry groups, which I frequently do. I like to emphasize that idea because it’s much more than just an empty slogan: it’s a guiding value for people who work in the credit union industry. “People helping people” — that’s something that you all are doing every day in your institutions, and it’s something to be proud of.
In my role as a regulator, I keep the focus on that core value statement, as well, because it can guide our decision-making at the federal level. The question I ask is: What can we do in Washington to help federally insured credit unions to serve your members better; to improve your product lines; and make a difference in the lives of your people and your communities?
Progress After Six Months
I took the helm at the NCUA just over six months ago, and we’ve been extraordinarily busy over that time. As many of you know, I served on the NCUA Board previously, from 2005–2009. So, when President Trump asked me to come back to serve as chairman, I jumped at the chance.
First, I was excited because I knew that I had unfinished business from my previous tenure, and I knew there were things we still needed to accomplish.
Second, I knew that because I had that earlier experience, we could really hit the ground running and start making a difference from day one.
So I asked my team to look back over the last six months and to give me a report on what we’d accomplished. And once I saw it all in black and white, I was downright proud of everything we’d gotten done!
Let me offer just a few examples of some of the reforms we’ve made in our regulatory system:
- We increased the threshold on appraisal requirements for commercial property from $250,000 to $1 million, a change that takes effect this month.
- We were the first federal banking regulator to issue interim guidance on doing business with the legal hemp businesses. This should allow credit unions to respond to changes in the law for this new industry that will benefit rural America.
- We proposed to delay the risk-based capital rule for two years, so we can find ways to improve it.
- We adopted the Payday Alternative Loans II rule, which is a free-market solution that responds to marketplace demand for a short-term, small-dollar loan program and is more affordable than traditional payday loans.
- We’re also encouraging expanded employment opportunities for people who were convicted of minor crimes in their past, but who have paid their debt to society and are seeking a new path forward through our Second Chance Initiative.
That’s just a partial accounting. We’ve published the entire list on the NCUA.gov website, so I’d encourage you to go there to check it out.
Now, I tell you that not because I’m trying to brag on myself and my team — well, at least not too much.
But I think it’s important to look at that list of accomplishments because in today’s political environment, you might look at the daily news out of Washington and think that nothing’s getting done. However, if you look beyond all the noise, there’s a great deal of outstanding work getting done at places like the NCUA.
And as for those achievements that the NCUA has made in the last six months, we’re proud of those, but I want you to consider them as a down payment. Right now, I’m more focused on what we can do in the next six months, in the next year, in the next two years, because the decisions we make now and in the next few years will have a big impact in terms of setting the direction for this industry’s future.
I want to emphasize that with all of the things we’re doing, we’re looking to give credit unions the tools they need to serve their members better. We’re striving for a regulatory system that is effective, but not excessive, and that brings with it confidence, fairness and accountability.
We want you to have more flexibility to innovate; to create financial products that respond to your members’ needs, and to continue providing the highest levels of service to your communities. That’s what we’re striving toward, and so far, I’d say we’ve been pretty successful at striking the appropriate balance.
That said, I also want to emphasize that your responsibilities haven’t changed: as always, we fully expect credit unions to focus on all the aspects of compliance that ensure the safety and soundness of this industry. Be aware of the potential risks that are out there — interest rate risk, credit risk, liquidity risk — and make sure you’re performing the required analysis and that you have management plans in place.
It’s worth reemphasizing that point because it’s the best preparation for the realities we can expect should the economy enter a downturn. Right now, we’ve been experiencing a period of low employment and steady growth, which is great news. But many of you have been in this industry long enough to know that business cycles are real, and we’re bound to experience a shift at some point.
We don’t know when it might happen, but we know it’s inevitable. So take nothing for granted. When the conditions change, we want the credit union industry to be prepared, so you can withstand the stresses of a challenging environment and emerge stronger.
So, with all that in mind, I’d like to look forward and offer some perspective on what we’re working on now, and where we’re headed in the months to come.
First of all, keep an eye open for some further regulatory relief that we know is timely and needed. For example, just last week, the NCUA Board approved an increase to the limit on public unit and non-member shares for credit unions. This is something we’ve been looking at for some time as a way to give your institutions additional flexibility in managing your funding sources.
And I believe it’s a reasonable increase because the previous limit had been put in place over three decades ago. The industry and the number of members it serves have grown tremendously in that time. So, finding ways to help your institutions to gain more access to capital — in a responsible way — will allow credit unions to serve the needs of your members and communities better.
This is especially true for small and low-income designated credit unions, many of which have net worth levels high enough to take full advantage of this new authority and will benefit the most from this important piece of regulatory relief.
All of these changes are in keeping with our efforts to give the industry more flexibility, so that you can continue to help more people, particularly low- and moderate-income families, improve their financial positions.
Finally, diversity and inclusion in the credit union industry remains one of our top priorities. I noticed in your conference schedule that you have sessions planned that deal with this very issue, and I commend you for that. We need to continue to further our commitment to diversity and inclusion. Because, given the profound demographic changes and social challenges we are seeing in today’s America, those are only going to grow in importance in the years to come.
I’m pleased to note that the NCUA is doing our part to put these issues on the front burner. In fact, just next week, we’ll be hosting our first Credit Union Diversity, Equity, and Inclusion Summit in Alexandria, Virginia. We’re bringing together industry leaders, regulators, and policy experts for a day-long series of conversations focused on what the credit union industry can to do better advance these vital goals.
I truly believe that financial inclusion is the civil rights issue of our time, so it’s a challenge we all need to prepare to face. And I hope an event like our upcoming summit will be an annual event.
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 financial services holds working families back from taking that next step up the financial ladder. We need to remove the obstacles to financial security these Americans are facing.
Whether it’s the challenges faced by African-American, Latino or Native American working families; the access challenges that military veterans or disabled Americans experience; or the lack of access to capital that’s putting a lot of stress on communities in rural America we need to do a better job of meeting those needs and bringing those people into the economic mainstream of American life.
That’s a goal I look forward to achieving with you, and the summit we’re hosting next week will be another “down payment” on further action.
Those are some important steps, but it’s only the beginning. We certainly have more to come. I look forward to having the opportunity to update you on our progress in the future.
Everything I’ve talked about today shares a common theme: it’s about how we can navigate a dynamic and changing marketplace effectively so we can continue to provide members with the services they need. We want this industry to be successful at steering through those changes so you can create more opportunity for your members and for your institutions, while also ensuring the safety and soundness of this industry in the future.
And the reality is that if we look around here in California and Nevada, there are tremendous opportunities for continued growth for this industry — expanding your fields of membership, commercial lending, mortgage lending, you name it. Before I came out here, I spent some time looking over the key statistics on the industry’s loan growth and loan performance in this region, and your numbers show that you’re hitting all the marks in terms of responsible lending.
Meanwhile, both states are enjoying relatively low unemployment rates, based on historical patterns. And in Nevada, especially, the Census numbers point toward strong population growth that could signal an outstanding opportunity for future membership growth, particularly in underserved communities where your efforts can make a difference.
The credit union industry — with more than 118 million members nationwide, and with $1.5 trillion and counting in assets — is in a good position to make that difference.
You know, in our agency’s role as a regulator, we focus on making and enforcing the rules that guarantee the integrity and accountability of the industry. That’s an important responsibility. But, I also think that a regulator’s role should go a little further than simply making and enforcing rules — we can also work with the industry to help you strive for and achieve more in terms of service to your members and to underserved communities.
Because reaching these underserved communities is a critical part of credit unions’ historical mission. And this industry’s future success lies with staying true to the values the credit union system was founded upon: the commitment to people helping people.
So I’ll end where I began: Let’s always keep the focus on people helping people by fostering greater financial inclusion, accessibility, and opportunity for all Americans. If we do that together, we can make a real difference in people’s lives.
I look forward to working with you to advance those values. Thank you very much.