CU Times Correspondent-at-Large

SAN DIEGO -- In a nod to the massive turnover credit unions willexperience as baby boomer leadership retires, NCUA Vice ChairmanRodney Hood provided an update on his Blueprint 20/20 initiative topump new blood into the credit union industry.

Blueprint 20/20 is designed to help the industry attract a newgeneration of interns, employees, volunteers and members, Hoodsaid.

"Most of us here have had long, successful careers in creditunions," he said. "I think our young people today need to have theopportunity learn about the valuable career opportunities in creditunion system, and Blueprint 20/20 will help you."

Hood rounded up an 11-person study group that was heavy onleadership from credit unions with college-based fields ofmembership and included two college administrators. Notsurprisingly, the group recommended using the institutions torecruit Gen Y.

The agency will soon release blueprint information that willadvise credit unions on how to create, administer, and in somecases, pay for college programs, including internships, mentoringand strategic consulting projects for MBA students, and buildingrelationships with college placement offices, Hood said.

The initiative will also provide advice on how to recruit newvolunteers and how to perform management assessment of timelyissues, such as membership growth, marketing campaign, productanalysis and membership segmentation.

Hood said credit unions shouldn't overlook the opportunity toattract young members by offering college loans.

"With the prices now at Sallie Mae, many credit unions havedemonstrated prime examples of people helping people, makingaffordable loans that send students to college," Hood said. "Don'toverlook how that helps attract young people to credit unions."

Hood had little on his agenda, saying he preferred to round outhis time with an interactive question and answer session with thestanding-room-only audience. The vice chairman fielded a number ofquestions from the audience, including:

Our examiner complains about interest rate risk in the mortgageswe keep on our books. How can the agency expect us to makemortgages when we get hit with interest rate risk accusations, evenwhen we're operating well within regulations?

Hood: The new way we're conducting examinations should take careof that. I don't think it's our place to dictate that you sellmortgages on the secondary market, especially if, like you said,you have the other controls in place. Now, you can show yourexaminer your risk controls, the ways you're managing thatrisk.

I think some examiners read something in the newspaper and tryto apply it to a credit union without looking at risks unique tothat institution, so hopefully in your next exam cycle, you'll havebetter results.

Look, folks, regulation is regulation. I don't expect us all tosing Kumbaya together, but there should be some sense of workingtogether toward a common goal.

What asset size should a credit union be before it considers amember business lending program?

Hood: It's not really an asset question, because some creditunions have as little as $50 million in assets, but have made goodbusiness loans. The latest NAFCU newsletter did an article on microlending, which would be a good idea if you want to test thewaters.

You'll definitely want to take a look at the core competenciesof your lending staff and your oversight ability. Those things arereally more a measurement than asset size. The issues are moreabout skill, capacity and infrastructure than asset size.

For those of you who may not have the ability to do a lot ofmember business lending, I'm a huge proponent of CUSOs. There's amember business lending CUSO in Texas that has been verysuccessful, and I recommend CUSOs as a strategy because it allowsyou to diversify risk.

How much more regulation can we expect around secrecy andBSA?

Hood: The Patriot Act is something we all support, but it'screating such a regulatory burden for you. I wish I could wave awand and make it go away, but we have to support what theTreasury's doing. And we're seeing some success generated fromthose Suspicious Activity Reports. They are catching terrorists;there are some success stories out there.

I don't see it becoming even more arduous, in fact, some groupsare looking for a carve out, not reducing the elements, but carveouts for smaller institutions. Credit unions know theirmember-owners. You know their birthdays and their anniversaries, sowhat can be done to make this easier on those who know theirmembers so well? That might give the bank and trade groups a heartattack, but I don't care.

What is your position on disclosing executive salaries?

Hood: It hasn't come before the board yet, but in my opinion,quite frankly, your salaries are none of my business. What you makeis not for me to decide, it's between you and your board. I supposeif your members want to know, they can ask you. We're just toobusy, we want to focus our attention elsewhere. Executivecompensation disclosure may be on the horizon, but at the end ofthe day, I don't see it becoming a big issue. The House Ways andMeans Committee wanted to ask about compensation for hospitaladministrators. As you know, many hospitals have nonprofitstructures, and there were rumors they were making between $2million and $3 million a year, and there were some rumors thatcredit union executives were, too.

Personally, I think some of you deserve another zero attached toyour salaries. You're running very complex institutions, not justshowing up cavalierly, but making difficult decisions in toughmarkets. I think you're well compensated, but you could use anotherzero, in my opinion.

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