At the moment there are two strong politcal drivers animating government and the public. One is the very anti-government, “chain-saw” wing of the Republican party. The second force is represented by socialist Zohran Mamdani (let’s make it free) surprise victory in New York’s democratic mayoral primary election.
Both want to overturn the status quo represented by existing institutions.
Most credit unions would not support either approach. They seek regulatory reflief from CFPB or some NCUA proposals (succession planning). But by all means let’s keep the status quo on taxation and our anyting-goes business models.
To date the only dramatic disruption of the credit union status quo was Trump’s dismissal of the two democratic NCUA baord members. NCUA is now overseen by a single administrator. I do not inclde the DOGE inspired staff cuts as change since credit unions have been assured it will be business as usual at the agency.
However is this the time to play it safe, preserve advantages and avoid any major organizational rethinking? Or is it possible to chart new courses for the cooperative system and credit unions?
The Regulatory Relief Approach
In August 2014 Mark McWatters joined the NCUA board filling the republican minority position. Fifteen months later in February 2016 he presented a 30 minute speech to CUNA’s GAC meeting in DC.
His speech offered 21 ideas for “regulatory relief.” Many of his suggesions would sound familiar today-extended exam intervals, due process on exam appeals, total review of regs, an IG exam hotline and freeing corporate credit unions from post crisis constraints.
This is the entire 30 minute speech often interrupted by audience applause. It would be fair to say that not much changed from this list.
(https://www.youtube.com/watch?v=LOssnO8QOnQ)
A Better Way-Challenging Assumptions about Change
To prepare the coop system for what’s ahead challenging current assumptions will be critical.
It all starts at the top by asking does anyone really believe NCUA is effectively fulfilling it’s Mission?
“Protecting the system of cooperative credit and its member-owners through effective chartering, supervision, regulation, and insurance.”
Or it’s Vision?
“Strengthen communities and protect consumers by ensuring equitable financial inclusion through a robust, safe, sound, and evolving credit union system.”
The current NCUA chair states the agency is just an “insurance company.” And every board member repeats the mantra that their “north star” is to protect the insurance fund.
Can anyone identify any NCUA efforts to strengthen and grow the role of cooperatives for Americans?
Why not embrace this disruptive politicalmoment to create a eoop system that truly serves Americans better than competitors? Are the prevailing assumptions about growth, scale and competitive advantage even valid?
Can we ask new questions? And propose options that would reignite the power of the cooperative model?
Here are some ideas being debated.
- Separate the insurance-collective capital role of the NCUSIF from NCUA. Create a public-private corporation ( like the congressionally chartered Coop Bank) with a board of credit union and public appointees to offer savings insurance and (re)capitalization roles.
- For those who still seek the comfort of federal oversight, authorize the option of FDIC coverage, similar to the Industrial Loan Charter option.
- NCUA would be a bureau in Treasury responsible for federal chartering and FCU exams. Its role would also promote credit union expansion focused on chartering and coop entrepreneurial initiatives.
- Strengthen member-owner roles in credit union governance and oversight through greater transparency, established member-owner rights in bylaws and explicit member ownership of the coops collective capital.
- Convert the CLF to become a coop central for liqudity in partnership with the corporate system. It would facilitate access to the secondary market and be under the oversight of the separate Insurance fund board.
- Permit charter conversions to for-profit models provided members receive their accumulated capital in full upon approving the conversion.
These are initial ideas. Now is the time to rethink how current trends and, members financial needs can be the basis for a re-designed cooperative system. Also to be pondered is what roles should established support organizations play?
Now is not the time for the tired phrase of regulatory relief. We’ve been there time and again. Rather now is an opportunity to re-design the coop system so that it can bring out its best promise for the future of its member owners.