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<p>NEW YORK – Credit unions need flexibility to serve their current members and attract new ones in today’s competitive financial marketplace. To NCUA, that means moving towards risk-based regulations, rather than having “one-size-fits-all” rules in place for credit union compliance, NCUA Chairman Dennis Dollar told an audience of close to 200 New York-area credit union representatives at a recent meeting of the Metropolitan District of the New York State Credit Union League. Dollar told attendees that his “Reg-Flex,” initiative which exempts credit unions with advanced levels of net worth and consistently strong supervisory examination ratings from certain NCUA regulations, is a way for NCUA to not to be an “excessive regulator, but a smart regulator.” “Reg-Flex has been designed to help you manage that risk better,” said Dollar. “NCUA went through six regulations that we felt did not apply to every credit union. We said that for those credit unions that have earned a high level of performance and net worth, those regulations would not apply to them. This is a far reaching action because it is the first time we have turned away from one-size-fits-all regulations.” Changes to the incidental powers activities were made in an effort to keep credit unions competitive in a changing marketplace and earn extra income on certain activities. “Old incidental powers rule, combined with the group purchasing rule, limited credit unions to being reimbursed the cost of providing an incidental service, but not earning any extra income from that service,” explained Dollar. “Since credit unions can only build net worth from the interest on loans, earnings on investments and income from additional services, we need to enable credit unions to have access to fee income from more additional services. “Incidental powers, for the first time, will allow credit unions to earn back not just the cost of providing a service, but to earn the market value of those services,” Dollar explained, adding that the change to incidental powers is a way of removing regulations. “It is a giant step, from a rigid to a specific approach,” said Dollar. The change in rules will also help credit unions keep up with the ever-changing demands from members. “An article in American Banker recently said that State Farm Insurance will be putting new bank branches in every one of their offices on every street corner in the country,” he said. “This is an age where you have competitors coming in every direction.” Dollar said he is amazed that under such circumstances, credit unions still have the tendency to fight amongst each other. “Credit unions want to fight state versus federal, community versus occupational, large versus small. You don’t realize that Merrill Lynch, Bank of America and State Farm overlap you all.” Commenting on the “Access Across America” initiative which gives credit unions the opportunity to be the primary financial institution for lower-income people in the underserved areas of the country, Dollar said that a primary reason why credit unions were not doing more to provide services to these areas was because there was too much regulation. “Regulations were slowing down the ability for a credit union to adopt an underserved area via a field of membership. Sometimes it would take a year and a half to add a field (of membership),” he explained. “To work within the rules, we have prioritized the ability to bring an under-served area into a field of membership. You don’t have to convert into a community charter. You can stay as an occupational, association, or faith-based institution,” he said. Through the initiative, more than 170 credit unions nationwide last year took in over 260 under-served areas, translating into 16.1 million people. This year, NCUA wants to reach 20 million under-served people under the program. Speaking to the New York City audience, Dollar took the opportunity to thank the credit unions here that did their best to continue service to members and others on September 11 and the months afterwards. “There are a number of stories of real heroism, and I want you to know the inspiration you have been throughout the country and to us.” -</p> <p>[email protected]</p>

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