Different by Design

Past structural changes at NCUA are relevant to today’s credit union environment.


“Different by design” is a phrase Dave Serlo, the late president of PSCU Financial Services, used two months ago in his last speech to the credit union community. His reference was to the unique institutional structure that characterizes every segment of the credit union system.   

This design difference was at the center of NCUA’s changes in the early 1980s. Deregulation replaced the former regulatory paradigm of financial services driven by government rules not market acceptance.

NCUA had to re-engineer every aspect of its responsibility to respond to this new era. The effort included all examination activity and reporting, CLF funding and distribution, and most importantly, the financial restructure of the NCUSIF. 

The NCUSIF 1% deposit financing is unique for government insurance. The Agency described two complementary requirements to make this new system work on pages 18 and 25 of its 1984 Annual Report to Congress and the President:

  1. “Don’t set it up and forget about it…Just as important, it’s yours to monitor – it’s your responsibility to keep it working – because if you don’t it’ll go just like anything else government touches.”
  2. “Our commitment is to straightforward disclosure of our funds’ finances, warts and all…We believe our full and fair disclosure should be no less than what we expect insured credit unions to give to their members.”

In Thursday’s webinar, we will review the 2008 and 2009 audit reports for the CLF and NCUSIF. This hour-long analysis (What Every Credit Union Can Learn From NCUA’s Audit Reports) will assist you in making informed comments and responses to Agency rules and plans. The NCUSIF is not like the FDIC – it is different by design. The event will include questions and answers. You can also access a recording of the program to show to your Board and staff. 

The purpose of a cooperative charter is to make a difference – member by member, community by community. Cooperatives are the answer to society’s challenges.

This week, Ben Bernanke called on financial institutions to increase lending to small business.

“Making credit accessible to sound small businesses is crucial to our economic recovery and so should be front and center among our current policy challenges,” Bernanke said yesterday at a Federal Reserve meeting addressing the needs of small businesses.

Member business lending is a vibrant component of the credit union loan portfolio. Now, it is more than an opportunity to provide a needed service to small employers, it is a dominant national priority in the country’s economic recovery and credit unions are serving this critical segment of the economy.