The NCUA May Have Just Given Us What We Want. Now What?

The NCUA board chair's GAC speech may pave the way for a once-in-a-generation opportunity for the credit union movement to leverage the loosened shackles of regulatory reform. Are we up to it?

 
 

Acting NCUA Board Chairman Mark McWatters closed his address at the 2017 GAC the same way he did at last year’s conference: “May the credit union industry live long and prosper.”

Speeches from regulators don’t tend to herald a sea change, but that may have just happened last week in DC. What we heard from McWatters may indicate that we are about to experience the most pro-credit union NCUA since Ed Callahan was chair some 35 years ago, during the early years of the Reagan administration.

His framework and leadership may give us the opportunity of a generation to prosper. Are we up for it?

Over the course of a few days last week, I was in a conversation with a group of CEOs talking about the tone a leader sets and how important that is. We joked about what tone the NCUA could take. 

We wondered, wouldn’t it be interesting if the NCUA board members viewed themselves the way a board of a mutual insurance company viewed its role?

As you read the annual reports of many mutual insurance companies you see they view the best way to prevent claims is through making the insured less risky. For example, investing in wellness programs to lower the number of claims.

McWatters has set a new tone for our movement. His 15 bullet points laid out a path for the NCUA to be a champion for a thriving movement. 

By making it less burdensome for credit unions to serve members they have the opportunity to become stronger, more sound organizations. Through this strength and prosperity the risk to the insurance fund is decreased. This is a fundamental change in how the NCUA views its role.

For years, the regulator has wanted credit unions to be in the risk avoidance business. The problem with that is this: a credit union may have 20% net worth be and carry a CAMEL 1 rating but be dying a slow, painful death.

Safe does not equal sound. But that was not the priority of former NCUA leaders. Instead, the attempt to reduce risk over all else has created a slippery slope towards irrelevance. Look at the number of mergers as evidence. 

On point after point McWaters challenges the status quo of regulatory burden: from FOM and risk-based capital to NCUA assessments and budgeting. He was very clear. He is not against regulation. He is in favor of regulation that fits the risk profile of the movement. 

A leader who has been coming to meetings like the GAC for more than 30 years told me this was the most pro-credit union speech she has heard in 25 years. “Today is a good day to be an American consumer,” she says. “Credit unions are back and open for business!”

While this may be a once-in-a-generation type of opportunity, the challenge for the movement is simple. We have the potential to get what we've been asking for: a regulator focused on helping reduce risk by helping us thrive and build relevancy, not through formal regulation and beaucracy. 

Are we up for the challenge? If so American consumers should be thrilled. They need credit unions in a big way. If not, well don’t want to think about that.

 
 

March 6, 2017


Comments

 
 
 
  • I thought the speech by Chairman McWatters at the GAC was not only full of optimism and promise for America's Credit Unions but, also and more importantly, for each and every credit union union member that we collectively serve. The only disappointing aspect of the speech was the unusually quiet crowd in attendance who had just seen a pretty good speech delivered by General Colin Powell. Powell must have been a "tough act to follow", because there is no doubt that the content of Chairman McWatters speech (the 15-point agenda) was enough to elicit a number of standing ovations from the credit union faithful which strangely never materialized. I mean come on now, revisiting RBC2...is anybody out there hearing this? Having seen and heard Chairman McWatters prior to the GAC, I can attest to his strong command of the issues, his dedication to a cooperative NCUA/Credit Union relationship and his deep concern for our members. I for one am up for the challenge and thrilled about our future!
    Bernie McLaughlin