Pundits and philosophers have noted that throughout history there is nothing permanent except change. Sometimes we create the change; other times, we respond to it. But we should never ignore it.
A great deal of change has occurred in the credit union industry in recent years, and the NCUA is committed to building a more flexible regulatory structure that parallels the industry’s evolution. To do this, the NCUA monitors trends in credit unions, the marketplace, and the economy. We learn from experience; and, perhaps most important, we listen.
Fortunately, the economy is recovering. Unemployment has fallen from double-digit highs. Credit union industry performance is improving. Capital levels exceed a healthy 10%; loan delinquencies are shrinking; earnings exceed 85 basis points; and membership is growing at nearly double the pre-recession rate.
To fully appreciate how rapidly the credit union industry is growing, consider this: It took 92 years for the credit union industry to reach $500 billion in assets, but it took only 11 years to double those assets to $1 trillion.
As the industry grows, it is also changing and becoming more complex. Assets are increasingly concentrated in the largest credit unions, which generally are performing very well. Unfortunately, many smaller credit unions continue to struggle, while some seek merger partners to improve service to members.
Evolving credit unions are offering new products, services, and technology. That’s appealing to members who want expanded financial services and better convenience. But it also introduces new risks for credit unions to manage.
Sometimes regulators put on the brakes until they can catch up. But on my watch, that’s not how the NCUA operates. As credit unions change, the NCUA is changing, too, to keep pace or ahead of the industry.
Underlying our changes is our statutory responsibility to protect the National Credit Union Share Insurance Fund. With a $12 billion reserve to protect against losses in a $1 trillion industry, the NCUA must be strategic, targeted, and efficient in managing our resources.
Just as credit unions must adapt to an increasingly competitive marketplace, the NCUA is modernizing regulations, updating infrastructure, improving operations, and hiring the best people we can attract.
The following are some of the specific changes you will encounter in your dealings with the NCUA.
Some changes involve policies. For instance, we are changing the way we do business, starting with exams.
We are internally reallocating exam resources to match potential risk exposure to the share insurance fund. We are streamlining exams for the smallest credit unions, so we can refocus resources where potential risk exposure is greatest.
For credit unions with more than $10 billion in assets, and for corporate credit unions, we are standing up a new Office of National Examinations and Supervision. This new office will centralize the requisite examiner expertise and establish a consistent approach to supervising the largest, most complex credit unions.
For all credit unions, we have trained examiners on problem resolution techniques and enhanced regional exam consistency through our National Supervision and Policy Manual. We are also making it easier for credit unions to get to know their supervisory examiner and examiners in advance of exams.
For credit unions that find it necessary to contest their exam results, we’ve provided clear steps on how the appeal process works, and we’ve elevated the role of our ombudsman.
We are improving communications with credit unions, not just about what we are doing, but why. We listen to constructive stakeholder suggestions about regulatory or exam process improvements, and, wherever possible, we act quickly to implement changes consistent with our mission to protect the share insurance fund.
We are moving forward with my Regulatory Modernization Initiative. Credit unions are already benefitting from our efforts to remove regulatory burdens without compromising safety and soundness. Examples include improved reporting on Troubled Debt Restructurings, a streamlined low-income designation process, and expanding regulatory relief to credit unions up to $50 million, which provides two-thirds of all credit unions with regulatory relief now and in the future.
Other changes involve the staff which implements NCUA policies. Employees are the most important asset in any organization, and there are many new faces at the NCUA.
At the highest levels, 75% of the NCUA’s top office directors today were not in their current positions in 2009.
Throughout the agency, as long-time senior staff retire and vacancies occur, we are hiring new blood from outside the NCUA as well as promoting internal talent. We are hiring accountants in addition to specialists in areas like economics, member business lending, investments, capital markets, and information technology. Our workforce is increasingly younger; 40% of examiners today have been with the NCUA fewer than five years.
Despite the ongoing pay freeze, the NCUA was recently ranked by the Partnership for Public Service as the “most improved” mid-sized federal agency. This award was based on surveys that showed 92% of NCUA employees “constantly look for ways to perform their jobs better,” and 97% are “willing to put in extra effort to get their jobs done.”
With our new policies and new employees, the NCUA is making tremendous progress. We are not here to hold you back. We are here to help guide credit unions forward. To reach that goal, the NCUA is modernizing and growing alongside credit unions.
Since the cost of any credit union failure is borne by all credit unions, our success is ultimately your success.
Debbie Matz is chairman of the NCUA.
Contact 703-518-6301or firstname.lastname@example.org