NCUA Board’s partnership transformed regulatory structure

Remarks made during panel discussion at CUNA’s annual GAC conference

By working together in a bipartisan manner, the NCUA Board enacted several regulatory reforms and modernization initiatives to meet its statutory obligation of ensuring a safe and sound credit union system while providing credit unions with measures of regulatory relief, National Credit Union Administration Board Chairman J. Mark McWatters and Board Member Rick Metsger said yesterday.

“Over a period spanning both of our chairmanships, we oversaw a reform and modernization effort allowing both the NCUA and the credit union system to navigate a rapidly evolving financial services marketplace while still maintaining safety and soundness,” McWatters said. “I want to thank Rick for his support and willingness to work with me on our shared regulatory reform agenda.”

“What I am most proud of over the last three years is that we implemented these reforms, through a bipartisan—or, more accurately, non-partisan—consensus of what needed to be done,” Metsger said. “It has truly been a partnership and one that has benefited credit unions, their members, and the nation as a whole.”

Chairman McWatters and Board Member Metsger made these remarks while participating in a panel discussion at the Credit Union National Association’s annual Governmental Affairs Conference in Washington, D.C.

“The NCUA is fundamental to ensuring credit unions are operating in a safe and sound environment,” said Jim Nussle, CUNA president/CEO. “We thank Chairman McWatters and Board Member Metsger for strengthening the credit union system by recognizing that regulation must be tailored to fit the unique structure of credit unions.”

“By sticking to your principles, that also means you’re sticking to safety and soundness,” Metsger thanked CUNA for representing its members.

Recognizing that this will be his last GAC, Metsger congratulated Nussle and CUNA as being the only national credit union trade association to support the closure of the Temporary Corporate Credit Union Stabilization Fund, which allowed for distributions to credit unions.

If any legislative change could be made in the future for credit unions, McWatters stated, and Metsger agreed, that the Federal Credit Union Act should be changed to allow credit unions to add underserved areas to their field of membership. “This is something that could move in Congress because it makes a lot of sense,” Metsger added.

McWatters also noted that CECL implementation and getting credit unions prepared for compliance is a priority for the financial regulator.

During McWatters’ and Metsger’s tenure as a two-person Board, the NCUA undertook several initiatives strengthening the credit union system and enhancing the agency’s ability to execute its mission in a more efficient and effective manner. Key accomplishments include:

• Implementing an extended examination cycle for well-capitalized and well-managed credit unions;
• Modernizing the NCUA’s field-of-membership rules to promote greater access to affordable financial services;
• Closing the Temporary Corporate Credit Union Stabilization Fund in 2017 and transferring its assets and obligations to the National Credit Union Share Insurance Fund;
• Returning nearly $900 million in share insurance dividends to eligible institutions in 2018 and 2019;
• Implementing an agencywide realignment consolidating several agency functions and closing two regional offices;
• Delaying the implementation date of the 2015 risk-based capital rule for one year and raising the asset threshold defining complex credit unions;
• Improving and centralizing the NCUA’s appeal process to make it more efficient, consistent, and transparent;
• Making sizeable investments in new technology allowing the agency to conduct its examination and supervision functions in the future more efficiently and with fewer disruptions to credit union operations; and
• Enhancing the transparency and accountability of the NCUA’s decisions, operations, and budget.

The panel discussion also addressed potential future challenges for the credit union system and for the NCUA. Both Board Members agreed that increasing cybersecurity risks, fluctuating interest rate risks, changing demographics, growing competition from new financial service providers, and continuing industry consolidation are significant challenges for federally insured credit unions going forward.

“All credit unions need to consider whether their product and service mix is consistent with their members’ future needs,” Metsger said. “This will require new ideas and investments in people, processes, and technology. The old ways of doing things will not work in this era of fintechs, mobile banking, and increasing competition. Each one of us, the regulator and the regulated, have a role to play in shaping the future of the credit union movement.”

McWatters added that these challenges mean the NCUA must modernize its examination and supervision program, replace outdated technology and systems, and reduce its regulatory footprint where possible.

McWatters said in closing, “Meeting with you all keeps me thinking and in tune. How can you regulate someone unless you understand what they’re actually doing; so keep up the good work.” 

About NCUA
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter, and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.