With new NCUA Board Members Rodney Hood and Gigi Hyland joining NCUA Chairman JoAnn Johnson at the November Board meeting, the NCUA Board was finally back to its full, three-member strength. I, like many in the industry, am curious about how the new board dynamic will play out so I made my way to Alexandria, Va. to take in the first meeting of the new trio. Of course it's way too early to have a gauge on Hood and Hyland, but their opening statements could presage what may be on their agendas. Hyland, the sole board member with credit union experience, certainly looked all of the credit union veteran by quickly hitting on three main "challenges" facing credit unions. First she cited credit unions being "admonished to validate their efforts to serve all segments of their charter." She wasted no time bringing up the documentation issue, and it appears the industry is ready to swallow this pill as they know the tax-exemption may hinge on it. Does she have a reg in mind? Second, she hit on the threats to the tax-exemption. It must be comforting for credit unions that a new board member immediately acknowledged this challenge – I'm sure the bankers don't like it. Lastly, Hyland noted credit unions struggling to have "their boards and management reflect the diversity of their membership." That is an interesting challenge to highlight, though I'm not sold on how that could ever be regulated. The diversity issue especially comes into play for credit unions that get NCUA approval for mega community charters, which bankers have attacked. These credit unions would do well to diversify their boards and show they've taken on the new community charter in more ways than just opening their doors to new membership, but to new leaders from the community. Hood's opening remarks reflect his background in helping the working class and his knowledge of government agencies. He referenced his younger days as a missionary in Africa, and how that experience showed him what "strong, struggling" people mean to a country. This isn't Africa, but the United States has plenty of strong, struggling people working hard to provide a good life for their families. Access to quality, low-cost financial services that credit unions provide can be vital for these people, who too often fall prey to the fringe players of the financial services industry. Hood cited the role credit unions can play in achieving the American Dream of homeownership, an initiative kicked off by former NCUA Chairman Dennis Dollar and carried on strongly by Johnson. He also referenced entrepreneurship and how credit unions can help create viable, small businesses. Hood was most recently the Associate Administrator of the Rural Housing Service at the U.S. Department of Agriculture. Based on his work there and some of his comments at the board meeting, I get a sense that he will be a strong proponent of credit unions working with other government agencies, such as the USDA and the SBA, to assist their members. His agency background and knowledge of lending to low-income rural Americans could be just what NCUA needs at this time. I think credit unions would be well-served to get so in tune with SBA and become such good conduits for SBA products to Americans, that the SBA becomes an ally in any attacks on credit unions' expanded business lending. As for the business of the meeting, credit unions have to like what they see from NCUA on the 2006 budget, which is increasing by less than 2% next year. Given that 85% of the agency's budget is from salaries, benefits, and travel, cutting staff is the easiest way to trim the budget. Full-time equivalents are declining again in 2006. Its FTEs have dropped steadily since the industry jumped on the agency back in 2000 for being too bloated at a time when the number of credit unions is declining. Dare I say NCUA needs to ensure it doesn't trim its staff too dramatically given the new, burdensome regs credit unions are dealing with, such as the Bank Secrecy Act and others. Credit unions and corporate credit unions consistently point to the malaise that is the regulatory environment as costing their institutions time and money – the same goes for NCUA even if the number of CUs is declining. Here's something for the industry to keep its eye on. NCUA may be facing a senior staff shortage in coming years. Twenty percent of its senior staffers are eligible for retirement next year and nearly half of them are eligible in 2010. There was a lot of talk about succession planning at the meeting. It's good to see Johnson finally has a full board to work with. Johnson has taken her licks recently for how some characterized her recent performance at the House Ways and Means Committee, but I think she is ready to break out with a few proposals that will put a stamp on her chairmanship. The agency will soon get a boost with two high-level CUNA lobbyists expected to join its staff, though neither CUNA nor NCUA will confirm or deny at this point. (See page 1 story.) These two individuals can help the agency get in tune with the political landscape and bring proposals to the table that will resonate with Congress. Having these new eyes on any upcoming documentation reg could prove invaluable. Expect the bankers to jump on these former lobbyists-turned regulators as more evidence that NCUA is too close to the trade associations. I wouldn't worry, just look at all the former bankers serving at the banking regulators. -Comments? e-mail [email protected]

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