BOSTON-NCUA Chairman Dennis Dollar told attendees of NAFCU’s 36th Annual Conference that he sees two major issues running into the future for credit unions: risk management and taxation. Along with risk management comes the diversification necessary to achieve proper balances of risk. Dollar pointed out that NCUA has implemented a risk-based approach to oversight, including the risk-focused examination process and the risk-based exam cycle. Next, credit unions need to focus their energy on a risk-based system of Prompt Corrective Action. Dollar pointed out that from 1980 through 1998, credit unions operated under a system similar to his proposal and assets grew from $58 billion to $388 billion while capital jumped from $3.66 billion to $42.3 billion. “Why? Because you were rewarded for making less risky decisions,” Dollar explained. The second challenge credit unions must stave off is taxation and the potential for demutualization that it carries. It’s not just an issue for state chartered credit unions, where the movement to tax credit unions has gained some steam in certain states. “Taxation.tends to become malignant,” Dollar said. He stated that it’s credit unions’ non-profit, cooperative structure that makes them deserving of tax exemption. Dollar added that if credit unions’ retained earnings are taxed, it takes away from the buffer for the National Credit Union Share Insurance Fund. He estimated that if credit unions were taxed the 35% corporate tax, their net worth would plummet from the current 10.71% to 8.42%. It also would increase the temptation to convert to a for-profit structure. Demutualization “would be a terrible loss for the American consumer,” Dollar said. While he admitted he would not want to live in a country without banks, those banks need competition. [email protected]

Complete your profile to continue reading and get FREE access to, part of your ALM digital membership.

Your access to unlimited content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including and

Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including and

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2024 ALM Global, LLC. All Rights Reserved.