WASHINGTON — NCUA Vice Chairman Rodney Hood has been on theboard since 2005 and before that had an extensive career in thebanking industry and working on rural credit issues at the U.S.Department of Agriculture. He recently discussed key issues facingthe industry and his own plans once his term on the board expiresin April.
Credit Union Times: What do you see as the high points of yourtenure?
Rodney Hood: Since I've come on board, I've seen credit unionscontinue to grow in terms of market share. They have differentiatedthemselves from other providers, not just for the sake ofdifferentiation but are doing it soundly.
CU Times: What do you see as the biggest regulatory changes we willsee from the new administration-both on a macro-level and as theyaffect your board?
Hood: It's hard to say what's going to happen with the financialregulation of credit unions. My posture has been that credit unionswere not at all a part of a lot of the market turbulence we've beenexperiencing, so I'd like to think that whatever happens goingforward, credit unions will be allowed to be part of thesolutions.
CU Times: What do you think of items on credit unions' agenda likeraising or eliminating the business loan cap?
Hood: The average member business loan is $240,000; that is a loanthat many other financial services providers are not making.Because of that loan size, credit unions can make a mark and helpbudding entrepreneurs build valuable, sustainable businesses.
CU Times: What about capital reform?
Hood: I'd like to see us do more to get a risk-based capitalsystem. It's important given that I've emphasized risk managementand risk mitigation, that credit unions should be able to marshaltheir assets against the riskiest elements of their balance sheets.In today's environment, the final payment of a fixed-rate, 30-yearmortgage has the same risk rating as a first-year auto loan.
CU Times: The law allows there to be only one NCUA Board memberwith credit union experience and your background was in banking.What has that been like for you in terms of understanding creditunions? Should the rule be changed?
Hood: Although my background wasn't in credit unions, I brought 20years of experience in financial services, including work with Bankof America, Wells Fargo and GE Capital, so I knew many of theissues credit unions were facing. We should change the rule so wecan have good, competent candidates who can hit the ground runningfrom day one, regardless of their experience with credit unions. Ihave mentioned this to Senate Banking Committee members who haveasked about this.
Also, when we are looking at the restructuring of regulations andthe NCUA, we should look at the size. While a three-member board isnimble, it prevents us from collaborating on activities becausewhen you have three members, because of the sunshine laws you can'thave two members meeting together.
CU Times: Are the NCUA and other regulators striking the rightbalance between ensuring safety and soundness and allowing creditunions to do their job?
Hood: Regulators should create an environment where credit unionscan operate safely and soundly and be sure they have the confidenceof their members. Some regulations can be excessive and especiallytaxing to our smaller credit unions. They don't have the breadthand depth of employees to delegate the compliance tasks for dealingwith a regulation. So I always ask myself when considering aregulation what will the impact be on small credit unions.
CU Times: What about the regulatory structure?
Hood: Putting credit unions under the same regulator as otherfinancial institutions would be a major disservice to credit unionsgiven their unique tax-exempt, democratically controlled,cooperative structure. If credit unions were placed under the sameregulator as others they would lose much of what makes themunique.
CU Times: This is a lousy time for all financial institutions. Arethere things the NCUA can do to make it easier for credit unions tosurvive?
Hood: This is a great time for credit unions to demonstrate thepeople helping people philosophy. They are making mortgages,business loans and auto loans, so they are not contributing to thecredit crunch. The main thing my agency can do is preserveconfidence, and we are doing that by reminding people that depositsare insured up to $250,000 and backed by the full faith andcredit.
CU Times: What about corporate credit unions? What will happen downthe pike in terms of regulation? Also will there be additionalconsolidation?
Hood: I can't speak to what they will look like in the future, butI can say I value the work that they do in providing natural personcredit unions with the payment systems they need, liquidity andinvestment services. I think the number of corporates we willeventually have will be market driven.
CU Times: What surprised you the most, in a good and bad way?
Hood: How much people love their credit unions. No one ever speaksof other financial services providers in that way.
Negatively, that credit unions focus so much on asset size. When Iask executives about their credit union one of the first thingsthey want to tell me is asset size, as if that should be thetelltale sign. I'd rather hear about other things, like field ofmembership, their outreach efforts and the products they offer asalternatives to payday loans.
CU Times: What are you going to do when your term on the NCUA Boardexpires in April?
Hood: Something in the financial services arena.
I am looking forward to finishing a book I've been working on aboutOpera-Voices Unheard-about African-American opera singers.
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