Board Governance Focus of New Survey
Late last year the NCUA published its regulation on expectations for credit union directors. The agency focused specifically on financial literacy and how it will be measured. As the July 27 deadline for compliance looms, Credit Union Leadership Forum conducted a survey of credit union executives and board members as well as numerous interviews about the NCUA regulations and the state of director literacy.
Following the financial crisis, the role of all directors has forever been changed in fundamental ways. Among credit unions, there is a frustration that traces back to annoyance with the NCUA’s dictates.
Observers also raised eyebrows to responses to: “Does your credit union perform an annual evaluation of board committees?” That’s because 77% said no.
The next question, “Does your credit union perform evaluations of individual board members?” found a large majority, 88%, said no.
The tradition of volunteer directors runs deep in the credit union world, as responses demonstrated. Just 28% said credit union board members should be paid and the remaining 72% answered they should not.
It is not just the role of directors in isolation that now is under review. Also in play is the delicate relationship between board members and credit union management. Some insist the varying roles are clear. “There’s a big gulf between management and governance, which is the board’s job. Management is about implementing the board’s vision,” said Lake Trust’s Winninger.
Oliver is not alone. Mansel Guerry, CEO of $29 million Brightview Credit Union in Mississippi and chairman of the Credit Union 24 board of directors, said, “There is a disconnect between regulation and reality. The water level is rising and it is drowning what this industry started out to do. NCUA will scratch its head and wonder where all the credit unions below $25 million went. The answer is: you buried them.”
NCUA was not alone in winning criticism. Marine Federal’s Marty Goldman caustically grumbled, “The [industry] trade organizations leaped on the NCUA ruling as a money maker, rushing to offer classes to directors. I find that unfortunate.”