In this latest test of political masculinity in Washington DC, the federal government has shut down.
NCUA says it is still open for business. As evidence the agency reissued this guidance from over 14 years ago:
This test of political will and messaging on both sides has an open-ended feeling about it. No one knows for how long or at what cost this standoff will continue.
This event and its aftermaths will only add to the many economic, financial and consumer uncertainties now infecting future outcomes.
This is not the first era of credit union’s navigating broad events outside their control. Recalling previous periods of change can remind that one of the most useful responses is to have options–not merely hunker down to weather the storms.
When Options Matter
The headline reads: Federal Credit Unions Eyeing State Charters as Rate Ceiling Hurts. It is from the Business & Finance section of the January 18, 1980 edition of the Washington Star newspaper.
The opening paragraphs:
Some federally chartered credit unions are trying to switch to state charters because the government’s 12 percent interest rate ceiling is shutting down their loan business. . .
In the last year, the 12 percent ceiling on loans has either shut down lending at some credit unions or generally restricted granting of loans in others.
Energizing the Options-NOW
Leadership is the art of changing before you have to. The Trump administration’s one consistent theme is disruption, if not the destruction, of traditional government functions.
Recently in an NCUA board meeting the single member Kyle Hauptman suggested that it was possible the agency might have no board members in the future.
Whether that was just a hypothetical musing or confirming his interest in another government position is unknown.
But assume that scenario. No board at NCUA. What would the administration do? What it has done with other vacancies, appoint an “acting Chairman” likely from Treasury. And then begin a process of assimilation like the OCC under that Department for the agency’s future.
Just one of many possibilities created when the status quo is not longer as political checks and balances are completely gone.
To protect the independence, integrity and unique role of credit unions, it may be necessary to go back to where the movement started and gained its credibility–the state chartered system.
State regulators (NASCUS), state insurance options, trade associations and every credit union, whether state or federal, should now be assessing the ability of the states to be their primary regulatory choice.
It is critical to reinvigorate the state chartering system as a real option as the federal government and NCUA seem to be careening away from any stable leadership and certain future.
Credit unions created the dual chartering system that has evolved into serving tens of milions owners. It may end up being their best hope for the future. That is just one history lesson from the 1980’s.