Will NCUA Star Power Help Credit Unions Make America Great Again?

The industry is safe, but it’s not sound. Today’s political climate is right for the regulator to take on a new role as the movement’s champion.

 
 

The credit union industry is safe, but it’s not sound. Perhaps the best way to turn that around is by turning the NCUA into a champion of the cooperative financial services movement.

The opportunity is there. The regulator’s three-person board could turn over in the coming months, making way for new appointees that beat the drum for credit unions and how they make America great.

That would be a radical change from the often adversarial relationship the NCUA has now with the financial institutions it regulates. The NCUA’s charge, of course, is to ensure the safety of the National Credit Union Share Insurance Fund. That’s happened, although some in the industry argue that safety is in spite of, not because of, the regulator’s best efforts.

 

 

But what about soundness? A credit union can be very safe — with 20% net worth and ROA of a couple of percentage points — but if its membership is declining as members die or move away, performance, and the institution itself, becomes irrelevant.

That’s not sustainable. That’s not sound.

So, what if the NCUA board pivoted to become a champion of the industry instead of solely a supervisor? What if the board chair visited the SBA to plug the role credit unions play in creating jobs by financing small business? What if the board chair attended HUD hearings to talk about the role credit unions play in providing affordable housing? What if the board chair touted how credit unions protect servicemembers from predatory lenders, rebuild communities, and provide trusted financial services in banking deserts?

That’s not been the regulator’s historic role, but precedent doesn’t seem to matter in today’s environment. If rhetoric trumps substance, why not combine both rhetoric and substance to step up the credit union advocacy game?

But don’t stop there; let’s really think outside the box.

What about an NCUA board led by Suze Orman? The consumer finance guru did some paid work for the NCUA in years past and regularly touts credit unions. Or Jean Chatzky? She’s another broadcast and print notable who’s been a regular on the movement’s conference circuit.

Yes, these are celebrities and not government types, but that’s the point. They’d fit the outsider mold the Trump administration has cast for these kinds of leadership roles.

The industry could present a compelling case if the right people got an audience with President Trump. The credit union movement — with its nearly 115 million members, average people just trying to get by — is right up his alley.

Who is better equipped than credit unions to give this nation of overtaxed citizens — who have been taken advantage of and disrespected by Wall Street and government insiders — the break they want? Who better than credit unions to provide an even playing field?

Instead of career politicians, let’s put some real star power at the head of that insular bureaucracy that controls our member-owned cooperatives. People who can create some sound and fury about how credit unions are the best choice for everyday Americans.

That would add soundness to the movement, and maybe even more safety, too. A regulator championing credit unions instead of just regulating them would be a powerful addition to the advocacy work of CUNA, NAFCU, the leagues, and other trade groups.

Together, they could whip up momentum to help a movement dedicated to people’s needs instead of owners’ profits and achieve even more as the second century of credit union service unfolds.

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July 9, 2018


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