NCUA Chairman Todd M. Harper Remarks at the African-American Credit Union Coalition Annual Conference

As Prepared for Delivery on August 26, 2022

Introduction

Good morning, everyone! Thank you, James, for your kind introduction. And, thank you Renée and the entire team of the African-American Credit Union Coalition for bringing us back together.

I’ve enjoyed seeing many familiar faces and meeting new people. I have also learned much from the panels, presentations, and conversations. But most of all, it is energizing to meet with so many people who share the commitment to building a better credit union system and a better world for all. So, it is a real privilege to join all of you, in a forum where we can openly share insights and best practices for advancing diversity, equity, inclusion, and belonging within the credit union system.

And, the “reunite and reignite” theme of this year’s AACUC annual conference fully captures that objective and purpose. We are certainly reuniting as a community of DEI advocates and allies, as well as reigniting our collective resolve to move the credit union industry forward.

For the U.S. credit union system to succeed and achieve its full potential, diversity, equity, inclusion, and belonging must be at the forefront of your work. In fact, your efforts to advance DEI align with the credit union system’s statutory mission of meeting the credit and savings needs of members, especially people of modest means.

And, by now, we all know the business case for DEI. It is simple, clear, and compelling. Organizations that embrace these principles have higher workforce engagement, retention, and productivity. They also create the products and services that others want, including those in traditionally underserved communities. So, the more diverse and inclusive an organization is, the higher its performance — and its earnings — can be. And, the better a credit union performs, the more that it can do to help create wealth and opportunity for all its members.

DEI at the NCUA

At the NCUA, we often say that “differences make a difference.” Diversity within our workforce is strengthened through ongoing initiatives like targeted recruitment and outreach, internships, employee resource groups, mentorship, and leadership development.

And, these efforts have produced notable results. In 2021, two out of five new hires at the NCUA were people of color. In addition, more than half of the participants in the agency’s development programs over the last year were female, creating a talent pipeline for new leaders at the NCUA. What is more, nearly four out of ten contract dollars at the NCUA went to minority- and women-owned businesses.

Those are encouraging numbers that we hope to continue to improve upon. Your credit union should aim to do the same.

CUDSA Update

In fact, to achieve real and lasting success, your credit union should measure its progress in applying DEI principles. Thanks to the Credit Union Diversity Self-Assessment, participating credit unions can evaluate their diversity and inclusion efforts and benchmark them with peer institutions.

Since 2016, 423 credit unions have voluntarily and anonymously submitted their self-assessments to the NCUA, with four credit unions having done so every year. Additionally, we know that the self-assessment is changing performance.

In that regard, I want to share a story with you. In meeting with the leadership team of a billion-dollar credit union before the pandemic, I shared the diversity self-assessment tool. Afterwards, one executive told me that merely looking through the items in the diversity self-assessment survey “shifted” his thinking. He then added that the survey was a “great chance to do a little good in the world.” Think about that: just looking at the survey changed someone’s thinking. Even if your credit union already completes and submits the voluntary self-assessment to the NCUA, we need your help. We need you to encourage more credit unions to do the same.

As for me, I strongly encourage all credit unions to submit their assessments annually. It is one of the most positive ways to embrace DEI principles throughout the system and learn where we can do better. From the preliminary analysis of workforce data submitted in 2021, we know that Blacks and Hispanics and Latinos are still underrepresented in the executive ranks and on the boards of credit unions. Clearly, we have much work to do to close this gap.

Your credit union will receive a custom link to the 2022 diversity self-assessment by the start of October. When you get it, please complete and submit the survey. And for those of you who want to get a head start, you can find the diversity self-assessment at online at cudiversity.ncua.gov. The submission period ends January 31, 2023.

MDIs in the Spotlight

Within the credit union system, minority depository institution credit unions have long walked the DEI walk. MDIs are a cornerstone within the system and represent one in ten federally insured credit unions. Overall, MDIs have diverse staff, management, and boards, and they have worked tirelessly for decades to serve a wide variety of underserved communities across the nation.

And, the pandemic and its economic fallout have shined a spotlight on the important work of MDIs, which were providing relief funds to those who needed it most at the time they needed it the most. Unlike many financial institutions, MDIs increased membership and lending during the pandemic. Notably, the total amount of MDI credit union lending grew by almost $3 billion during 2021, an increase of more than 9 percent over the prior year. This percentage increase in MDI lending exceeded the increase recorded by all federally insured credit unions. And, this increase demonstrates that MDI credit unions are working within their fields of membership to assist in a more equitable economic recovery.

CDRLF Support

For that and many other reasons, the NCUA remains fully committed to supporting low-income credit unions, including MDIs. Advancing economic equity and justice is a priority for the NCUA, and the Community Development Revolving Loan Fund grants funded by Congress facilitate our ability to achieve that objective. These investments go into communities that would otherwise have unmet needs, giving credit unions additional resources to build their capacity and create more secure financial futures for their members.

This year, the NCUA will award grants for small credit union mentoring, training and leadership development, underserved outreach, and digital services and cybersecurity. We will announce the awardees next week. Yet, even before that announcement, I can share that grant demand continues to outpace available funding. In fact, we received requests for three times the available grant dollars.

But, there is hope that we can increase our grants in 2023. The President’s budget to Congress requested $4 million for the Revolving Loan Fund in the year ahead. That amount would more than double the amount available to support our grants to MDIs and other low-income credit unions. And, with more funding the NCUA would be able to offer more grants, provide larger grants, and find greater ways in assisting low-income credit unions to fulfill their missions.

MDI Preservation

The NCUA has several other ongoing initiatives to support and preserve MDIs. These efforts include an MDI mentoring initiative; technical assistance from NCUA examiners; and online education through the agency’s Learning Management Service that includes materials targeted to the needs and missions of MDIs. Over the last two years, the NCUA has also approved field-of-membership expansions for 49 MDI credit unions, allowing them to add more than 1,500 new groups or geographic areas to be served.

And, we created an MDI-focused working group as part of the agency’s Advancing Communities Through Credit, Education, Stability, and Support initiative, otherwise known as ACCESS. A priority of NCUA Board Member Rodney Hood, the ACCESS initiative seeks to foster financial inclusion and address the financial disparities experienced by minority, underserved, and unbanked populations. The ACCESS MDI working group has focused its research on technical assistance programs available to MDIs, examination and supervision resources dedicated to assisting MDIs, and possible public-private partnerships that could support MDIs.

The NCUA regions also recently introduced the Small Credit Union and Minority Depository Institution Support Program. Under this program, NCUA exam staff may provide assistance that would normally not be a part of the regular exam process, including creating succession plans, developing marketing plans, and evaluating earnings and the relationship to loan and deposits.

Additionally, the NCUA updated its online Credit Union Locator Tool in 2021 to include a function that identifies whether a credit union is an MDI. With this simple change, prospective credit union members can now more easily identify a credit union that meets their demographic preferences for financial products and services. The tool is available at the NCUA’s MyCreditUnion.gov.

ECIP: A New Tool

And, let’s not forget the resources available from other agencies. To support the recovery in those places disproportionately affected by the pandemic, Congress enacted the Emergency Capital Investment Program to “provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities.”

ECIP fully aligns with the mission of the credit union movement to expand access to affordable financial products and services to people of modest means. The Treasury Department consulted with the NCUA in developing the program’s guidelines, and the NCUA assisted in the application review. And, many of you in this room stepped up to request ECIP funding.

In all, 23 low-income MDI credit unions received more than $720 million in ECIP awards. Over the next 30 years, the MDIs receiving these funds have the potential to change the financial futures of their members and the communities they serve. In short, this patient capital will likely be a game changer in advancing economic equity within our financial system.

MDI Peer Metrics

But, we can still do more. As I meet with credit unions, I often hear about how it is difficult to compare MDI performance to other comparably sized institutions during the examination process. Through the NCUA’s work on the Federal Financial Institutions Examination Council, I also learned that other federal banking agencies do not use peer metrics when assessing MDIs, because MDIs operate with a different business model that makes it difficult to compare them to other institutions of the same size.

As a result, our staff are now exploring how the NCUA could implement a similar change for MDI examinations and equip our examiners with the tools needed to better assess MDI performance. We will announce these changes in the coming months.

MDI Track at DEI Summit

Finally, the NCUA will host its third DEI Summit beginning on November 2 at the Hilton Washington Dulles Airport in Herndon, Virginia. This two-and-a-half day, hybrid event will bring together professionals from credit unions and other financial institutions to promote the value proposition of diversity, equity, and inclusion; share DEI and financial inclusion best practices; and develop solutions to industry-specific challenges.

We will also have an MDI track designed to support, educate, and receive feedback from MDIs.

Whether you are an MDI credit union or a DEI advocate, or both, we look forward to seeing you — either in person or virtually.

Closing

In closing, MDI credit unions have been more than just a port in the COVID-19 pandemic’s storm. They were a lifeline to consumers who are historically underserved even during the best of times.

MDI credit unions persevered and excelled for the last 29 months. We at the NCUA are committed to maintaining and building that momentum going forward. The NCUA Board must also remain mindful of disparities and inequities when crafting regulations, conducting exams, and setting priorities.

Thank you for inviting me. I look forward to my conversation with Dohnia.