NCUA Board’s Partnership Transformed Regulatory Structure

ALEXANDRIA, Va. – By working together in a bipartisan manner, the NCUA Board enacted a number of 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.

“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.

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 agency-wide 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.

“The NCUA has several initiatives in process to improve and modernize how the agency conducts its examination and supervision program,” McWatters said. “This means modifying our processes and procedures, leveraging technology, collaborating with state supervisors, and moving to more off-site supervision. It will take time to develop and implement these improvements and systems, but they will transform how the agency approaches its safety and soundness mission in the future.”