NCUA: Will They? or Won’t They?

By. Hon. Daniel A. Mica, Principal, The DMA Group

A question of, “Will they? or Won’t they?” arises after the National Credit Union Administration Chairman Debbie Matz announced plans for a “new” NCUA at the 2013 CUNA Government Affairs Conference.  Matz promised a modernized and revitalized NCUA, but whether it comes to fruition remains to be seen.

Chairman Matz rolled out her vision for tackling the challenges that credit unions are facing in the industry’s ever growing and complex environment, including:

• Interest-rate risk from long-term, fixed-rate loans;
• Interest-sensitive deposits;
• New technologies like mobile banking; and
• Concentration of assets in the largest credit unions.

The solution: new people and new policies to stay ahead of the curve and create a modern and responsive NCUA.  “Sometimes U.S. regulatory bodies put the brakes on change until the regulators can catch up. But that’s not the choice NCUA is making—not on my watch,” Matz added. “We can either try to slow it down, or we can do everything in our power to move forward ourselves.”

According to Matz, personnel changes have been implemented with new talent replacing retired senior employees, 40 percent of the examiners have been with NCUA fewer than five years, and a 75 percent change in office directors has occurred since 2009.

NCUA also touts their regulatory changes made in the past year:

• Addressing the agency’s Troubled Debt Restructuring rule to keep more credit union members in their homes and ease credit union reporting burdens;
• Removing red tape from the process of designating a low-income credit union, which she said has added more than 800 designations and encouraged more small business lending; and
• Exempting more than two-thirds of all credit unions from certain NCUA rules by raising the asset threshold for small credit unions from $10 million to $50 million.

Even though there is much more to be done, the credit union movement cannot deny that there are clear changes from the new NCUA in the Central Office. The real question lies in whether or not credit unions will see the new NCUA in the field.

For example:

• Will small credit unions see examiners for fewer hours so they can get back to the business of running their credit unions?
• Will larger credit unions see a green light to offer innovative new products and services?
• Will the largest credit unions see examiners who understand their complex balance sheets?
• And will most credit unions see shorter Documents of Resolution?

Some may be skeptical and still critical of the NCUA’s strategic plan to work for and with the credit unions. This distrust is long-standing and I suggest that this could be a unique time to offer positive reinforcement for those proposals that are strongly needed by the credit union movement.   Chairman Matz had made an effort to reach out to credit unions during her 2012 national listening tour and now she is promising action. I think she realizes that her legacy will in large part be measured by the extent in which the bar is raised to create a more effective and efficient regulating body. As Matz has said, the new NCUA will not be measured by whether NCUA succeeds; it will ultimately be determined by whether or not credit unions succeed and I could not agree more.