As Prepared for Delivery on August 20, 2019
Thank you very much. I always appreciate having the opportunity to spend time with the men and women who are on the front lines of the credit union industry.
There’s simply no better way for a regulator to get a clear sense of what’s happening in the industry — and what needs to happen — than from talking to the people who are directly affected by the decisions we make in Washington. So, thank you all for hosting us and affording me that opportunity.
I’ll be sitting down with Tony in a few minutes for a more detailed conversation about the National Credit Union Administration and my own plans for the agency. But, he also invited me to speak briefly beforehand. Tony saw a recent editorial in Credit Union Times about a remark I made in an interview on financial inclusion, and he wanted me to elaborate.
In short, in 2019, too many people still lack access to safe, reliable, and affordable financial services. You are all probably aware of the FDIC’s survey of unbanked and underbanked Americans. If you’re not familiar with it, you need to be — because it tells you a lot about underserved Americans.
What that study tells us is that there are some 8.4 million households, more than 14 million adults, without a checking or savings account. An even larger number, 24.2 million households, with close to 49 million adults, have accounts at an insured institution, but still rely on alternative financial services or products outside the banking system, like pawn shops or check cashing services. Those numbers show some improvement over previous years, but progress has been too slow.
We know we can reduce those numbers by helping these people get access to quality financial services. I believe credit unions are better positioned than any other player in the financial sector to get that done.
Why? Because extending access to financial services for underserved communities is what this industry has always done best.
I want to be clear about what I mean when I talk about “inclusion.” First of all, I am not talking only about minority populations. Obviously, there are some serious issues we need to deal with in working to reach, say, African-American families, Latino families, or Native American families. There’s a divide that needs to be addressed.
But financial inclusion is not only about minority communities. We need to think much larger and focus on extending access more broadly to all Americans who need these services to prosper.
That means we have to recognize the other dividing lines that affect your potential credit union members.
For instance, age is one of those dividing lines. We know younger Americans are far more likely to be unbanked than older Americans.
Or increasingly, where you live is a dividing line. For example, the withdrawal of so many financial institutions from rural communities, especially over the last decade, has posed a serious threat to financial access for the people who still live there. When communities lose financial access, it is almost like cutting off the oxygen supply that is needed to fuel the local economy.
And accessibility is a dividing line. Finding safe and affordable financial services that are accessible can be a real challenge for far too many Americans with disabilities, including our Wounded Warriors and veterans.
I make these distinctions because I believe credit unions are well-positioned to deal with these issues — and defense credit unions are especially well positioned to lead the way.
For example, there are a lot of innovations that defense credit unions have pioneered to better serve members in far-flung postings around the world. Those innovations might help us to get a better sense of how to target services to rural communities or other hard to reach places.
Defense credit unions are skilled at offering services to younger members, since that’s who makes up such a large part of the active duty military population.
And they’re going to be a highly mobile population, since they are transferred frequently and often don’t have enough time to put down roots in a community.
Since so many of them are just getting started, they may not have much experience in working with financial institutions — at least not yet. I imagine many of you have had the experience of helping a young soldier, sailor, Marine, airman, or Coast Guardsman, someone who enlisted just out of high school, who is setting up their first checking account.
Or you’ve dealt with young military families who have recently been transferred into your community and they need help with housing, car loans, and other financial needs. So, you all have developed strategies to better meet the needs of a young, mobile population. Again, that’s something the industry as a whole could learn from.
The work you’re doing is incredibly important. When it comes to providing our men and women in uniform with the support and service they need, your institutions and your people are playing a vital role. When it comes to financial inclusion, I think the industry as a whole can learn a great deal from how effectively you’ve met those challenges of dealing with populations that are diverse and highly mobile, and have perhaps had limited interaction with financial service providers.
And in so doing, you’re keeping faith with the historical mission of the co-operative credit system. From their beginning, credit unions were intended to serve people of modest means who had been overlooked and underserved.
From their very beginning, credit unions have helped to foster greater financial inclusion, accessibility, and opportunity for all Americans. Holding to those historical commitments is the best way to serve your customers, to grow your membership, and to do good at the same time.
At the NCUA, we’re always looking for ways we can support you in that mission. We want to give you the tools you need to better serve all of these populations and communities who are being overlooked. These are worthwhile goals we can work toward without compromising the safety and soundness of any of the institutions under our oversight.
We also know that improved financial literacy and financial capability will be a big part of that mission. Many of your institutions are already leading the way when it comes to helping your members to improve their own financial knowledge and habits. We can support you in that with our own financial education tools and resources. We also want to learn from what you’re doing, so that we can extend those educational efforts more widely.
America’s soldiers and sailors have answered the call to keep us all safe. The credit unions represented here today have answered the call to keep our service men and women’s money safe, and to help protect and promote their financial well-being.
These are much more than just good business practices to attract more members. I consider financial inclusion to be the defining civil rights issue of our time. We know that the lack of access to affordable banking and lending services holds working families back from climbing the financial ladder. I’m committed to doing everything we can to recognize and incentivize what’s best in the credit union mission, so that we can remove the obstacles to financial access that all of these underserved communities are facing.
The men and women of America’s armed services have dedicated their character, talents, and skills to keep us all safe. They are the ones who, in Gen. Douglas MacArthur’s famous description, must, from time to time, “stand up in the storm.” Their devotion to duty, honor, and country leads them, and inspires us, as he said, “to build courage when courage seems to fail, to regain faith when there seems little cause for faith, to create hope when hope seems forlorn.” In the course of our daily business, we are fulfilling our obligation to them to protect their assets and to provide opportunities to build more secure financial futures for themselves and their families. I am proud to serve alongside you in this work. Thank you very much.