As Prepared for Delivery on October 1, 2021
Thank you very much for the kind introduction. It’s a pleasure to join you today, and I’m especially delighted that conditions are so much improved that we’re able to gather in person. After what we’ve been through the last year and a half, I think we’re all ready for a gradual return to a more normal footing, even if we still have some way to go to reach that point.
I spend a lot of time studying what credit unions are doing, and one of the best parts of this job is that I’m regularly reminded of how powerful the credit union model can be for making a difference in our communities. This initiative is a true testament to the strength of that model. I certainly look forward to checking in on the progress of this program so we can see how it works – it looks like a promising experiment.
I use that word, experiment, deliberately because I like to think of the credit union model as a long-term experiment in what is possible through cooperative finance. And what I’d like to focus on today is what we need to do to ensure that this highly successful experiment continues to succeed for the coming decades.
As we recover from the pandemic – and let’s recognize that while we’re not out of the woods yet, we’ve made incredible progress — we should encourage more of this type of experimentation. Because one of the critical lessons that we should take from the last 20 or so months is the importance of resilience. And I believe having the ability to respond rapidly to changing conditions, to develop and experiment with new solutions to existing problems, is key to that resilience.
When I talk about the resilience of the credit union system, that’s not just flattering verbiage; we have hard numbers that show how effectively this system has held up as we come out of the pandemic. Just look at the report from the second quarter of this year, which shows federally insured credit unions with net income growth of $11.9 billion – that’s 126.8 percent over the same period last year. Insured shares and deposits were up $196 billion to $1.58 trillion, 14.2 percent over last year’s second quarter. It’s a similar story when we look at loan growth, delinquency rates, and other key measures. The industry has adapted to this challenging environment and has performed well during a time of almost unprecedented challenge and uncertainty.
The question is: how do we keep building on that impressive record of success?
First of all, we need to keep up our progress on regulatory reforms that help credit unions to better serve their members while ensuring the ongoing safety and soundness of the industry. Since I rejoined the NCUA Board as chairman in 2019, this has been a top priority for me. And while I turned over the chairman’s gavel to Chairman Harper earlier this year, regulatory reform remains my top priority.
So, for instance, in the months to come, I’ll be focusing on regulatory priorities like streamlining the process to encourage more charters of federally insured credit unions. I’m concerned by the lack of new entrants to the market, which is key to ensuring both competition and full financial inclusion to under-served communities, and there are steps we can take to address that shortfall.
I’m concerned by the shortage of affordable housing, especially for younger and first-time homebuyers. Earlier this year Chairman Harper appointed me to represent the NCUA on the board of NeighborWorks America, a Congressionally chartered non-profit organization dedicated to increasing access to affordable housing in communities across the nation. So that’s an issue I’ll be focused on working with credit unions to see how we can address that deficit.
I’ve been intensely focused on the challenge of financial technology – we need a constructive regulatory framework to help credit unions better understand how to integrate fintech into their business models. I’m particularly interested in how we can deploy these tools to help the under-served, the marginalized, the unbanked, those without access to financial services. That’s another area where I encourage credit unions to experiment, and we’ll be working to ensure that you’re not penalized in the examination process for putting these tools to work for your members.
And you may have seen recently that’s I’ve urged reform of federal banking laws to allow marijuana-related businesses to fully access the banking system. Regardless of how you or I might feel about marijuana and cannabis products, the reality is that it’s legal in one form or another in 36 states; there’s an industry growing up around these products to service this market; and ultimately, full legalization at the federal level is a foregone conclusion – every expert I’ve spoken to on this issue agrees that it’s a matter of when, not if. I’ve also called for an interagency working group on the part of federal regulators to start developing standards so that we’ll be prepared to address this issue once Congress acts. We simply should not delay on this any longer.
Of course, those priorities are only the tip of the iceberg. I could just as easily discuss the NCUA’s ACCESS initiative we launched last year to promote financial inclusion, cybersecurity, the ongoing pandemic response, or a host of other issues that we’re working on. We have some time scheduled here for a question-and-answer session, so perhaps we can touch on these issues in more detail during that discussion.
But to round off my talk before we proceed to that discussion: Credit union leaders frequently ask me what we need from them. And I always tell them that the most important thing we can get from the industry is engagement and communication. If you’re a part of this industry, you should not stand by and wait for regulators to address the challenges you face. You need to make your voices heard at every point in the process to ensure that your perspectives are being taken into account.
Toward that end, I’ve proposed that the NCUA Board establish an advisory committee as a more formal channel for industry leaders to share your ideas with the agency. In the meantime, I hope you’ll continue to keep us posted on what we can do to help you serve your members better.
Moreover, I encourage you to communicate with one another, which is the great thing about events like this because it provides a forum where we can share ideas. Just imagine if you’re a credit union executive and you go can back home after this conference and tell your board, “I was talking to someone from Boston and they have this great program to help firefighters and first responders get their first mortgage –we should look into doing something like that.” And before you know it, the ideas are spreading and we’re seeing a real difference in even more communities. Again, that would be in the best spirit of the credit union mission of cooperation and “people helping people.”
I’d like to end by emphasizing that I’m extremely optimistic about the future of the credit union model. That optimism is founded, in part, on the spirit that I see reflected in organizations like Firefighter Credit unions, which are such an excellent example of the credit union cooperative model in action. You all do great work for your members, and serve as a reminder of why credit unions are different – these aren’t just banks by another name, but a very special kind of financial services institution that is devoted to more than simply accumulating profits, but also to a mission of service and community development.
And that’s so important when think of how much we rely on firefighters and first responders to be there when we need them – even if we hope we never find ourselves in a position to need them. We were reminded of that vitally important role just a few weeks ago with the 20th anniversary observance of 9/11, an event that drove home to all of us the terrible risks they and their families bear on our behalf. We’re reminded of that today when we look west and see how valiantly those crews are working to combat the wildfires in California, Oregon, and elsewhere.
I was stricken by the words of one New Jersey firefighter, Chief Bud Connelly, in a news report on the 9/11 anniversary in which he spoke of the losses on that terrible day. He said, "The wounds don't close. I lost friends there that day, and I will always remember them. But there is always a light at the end of the tunnel…There is always something positive we try to bring out of it."
That’s as good an illustration of “resilience” as I can think of, and a reminder of how much we owe to the men and women who sacrifice so much to ensure the safety of our communities. We can never fully repay our debt to them, but what we can do is to ensure that they can count on a trusted financial services provider that looks to the well-being of their families and communities. Thank you so much for all that you do on their behalf.