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Agency Chairman Speaks to NAFCU Congressional Conference

WASHINGTON, D.C. (Sept. 10, 2019) – The success of the credit union system rests on credit unions and the National Credit Union Administration working together, NCUA Chairman Rodney E. Hood said today.

“The industrialist Henry Ford once observed that, ‘coming together is a beginning; keeping together is progress; and working together is success,’” Hood said. “Our challenge now should be to determine the best ways to keep the industry’s record of success going, so as to set us on the right course for the future.”

Chairman Hood spoke to National Association of Federally-Insured Credit Unions’ annual Congressional Caucus. The full text of his remarks is available online.

Chairman Hood gave a summary of his first five months at NCUA’s helm and mapped out a cooperative vision for the agency’s and the industry’s futures.

“I’d like to approach this from the perspective of what we’re doing, what you need to be doing, and what we should be doing together,” he said.

What NCUA is Doing

Chairman Hood described his goal of creating “a streamlined and modernized regulatory and supervisory system that encourages innovation, provides flexibility, and fulfills our primary mission of protecting safety and soundness.” To those ends he said, the NCUA has:

• Increased the commercial property appraisal threshold from $250,000 to $1 million;
• Proposed an increase to the limit on non-member deposits;
• Issued interim guidance for credit unions wishing to serve the hemp industry; and
• Proposed a two-year delay for implementing the risk-based capital rule to explore possible improvements.

The agency also is modernizing its examination system and Call Report.

Chairman Hood added that he plans to bring two proposed rules to the Board before the end of 2019. The first would allow subordinated debt to be counted as regulatory capital for a broader range of credit unions; the second would increase transparency in transactions where credit unions acquire assets of banks.

What Credit Unions Need to Do

Chairman Hood challenged credit unions to take advantage of the many opportunities that rapid technological changes are bringing to the financial sector while being mindful of security.

“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,” he said. “We should not approach these challenges as things to be feared or avoided, but as opportunities to serve your members, your employees, and your communities.”

Other areas where credit unions should pay particular attention, he said, include:

• Liquidity levels;
• Interest rates, the yield curve, and risks associated with lending and investment;
• Concentration risk; and
• Compliance with the Bank Secrecy Act and anti-money-laundering laws.

What NCUA and Credit Unions Can Do Together

Expanding access to financial services, Hood said, should be a top priority for the credit union system, and he noted the recent federal court decision in the agency’s field-of-membership litigation with the American Bankers Association will help credit unions reach more people, particularly in rural and underserved areas.

“We know that, in many parts of our nation, it has gotten harder for people to get the financial services they need,” he said. “We need fresh thinking on how to address the needs of those communities.”

That kind of cooperative effort, Hood concluded, is the basis of the credit union idea.

“This industry’s future success lies with staying true to the values the credit union system was founded upon,” Hood said, “the commitment to people helping people by fostering greater financial inclusion, accessibility, and opportunity for all Americans.”