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Board Member Urges a Dedicated Supervision Program for Consumer Protection

WASHINGTON, D.C. (Feb. 26, 2020) – The mission of America’s credit unions reflects the fundamental principles of democracy itself, National Credit Union Administration Board Member Todd M. Harper said today.

“More than 200 years ago, our founders wrote a Constitution that begins with ‘We the People,’” Harper said. “If you think about it, the credit union mission really tracks the vision of our founders. Immediately after ‘We the People,’ the Constitution speaks about striving to form ‘a more perfect union.’ With the NCUA’s oversight, today’s $1.5 trillion credit union system aims to achieve that laudable goal.”

Board Member Harper spoke to the Credit Union National Association’s Governmental Affairs Conference, covering issues affecting credit union members, including diversity and inclusion, consumer protection, and safety and soundness.  A copy of his prepared remarks is available online.

Prioritizing Consumer Protection and Inclusion

Harper’s four priorities as an NCUA Board member are capital and liquidity; cybersecurity; diversity, equity, and economic inclusion; and consumer protection. In the latter area, he said the NCUA “needs to refine its approach to consumer financial protection” by creating a dedicated supervision program for compliance to address the growth and change in the credit union industry.

“Consumer compliance exams are like regular maintenance on your car,” he said. “Would you go 10 years without getting a tune-up and checking your oil? None of us would. My proposal is about ensuring that a credit union runs smoothly, and if it does not, providing the maintenance needed to optimize performance.”

Similarly, Harper said the NCUA should take the lead in fostering “an environment that promotes inclusion, which will lead to economic dignity for all.”

“Diversity, equity, and inclusion are highly important to the continued health of the credit union system,” he said. “The agency should support the work of small credit unions, minority depository institutions, and low-income credit unions, who are often the ones reaching the underserved and facing the challenges of increased competition and difficulties achieving economies of scale.”

He encouraged credit unions to use the agency’s voluntary credit union diversity self-assessment.

Concerns on the Horizon

Harper said that, looking ahead, succession planning, liquidity, and growing consumer debt are three important issues facing the NCUA and credit unions.

With particular respect to succession planning, Harper said “be prepared” should be credit unions’ motto.

“About one in five credit unions lack CEO succession plans,” he said. “This Hoosier learned young that to ‘be prepared’ is to be a good scout. Succession planning is really about being prepared. A large portion of credit union CEOs and executives are Baby Boomers who will be part of a retirement wave. There is a real need for credit unions of all sizes to focus on succession planning, especially if we want to avoid mergers.”

Harper noted that, despite good economic numbers, “some households are running into trouble.” Consumer debt, after adjusting for inflation, is now higher than its peak during the economic crisis. Meanwhile, delinquencies on credit card payments—consumers owe a record $930 billion on their credit cards—are rising.

Planning for a possible economic downturn should include careful evaluation of new credit risks and quickly mitigating delinquencies, he said.

Harper reminded his listeners of the essential role credit unions play in the economy.

“When credit unions expand access to responsible financial services, our economy will grow,” he said. “Through the ongoing efforts of the NCUA to refine its consumer financial protection program while also supporting small credit unions, minority depository institutions, and low-income credit unions, we can work together to create that more perfect union our founders envisioned.”