ST. PETE BEACH, Fla.–NCUA Chairman Todd Harper laid out both the business case and the moral case for why diversity, equity and inclusion initiatives should be at the “forefront” of credit unions’ work, and further announced potential upcoming changes to how minority depository institution (MDI) credit unions are examined.
In remarks to the African American Credit Union Coalition’s annual conference, Harper said, “We all know by now the business case for DEI. It is simple, it is clear and it is compelling.” He cited research showing organizations that practice DEI have higher rates of retention and productivity among employees.
“The more diverse and inclusive an organization is, the higher its performance and its earnings can be, and the better it performs the more it can do to help build wealth for all,” Harper said.
Initiatives at NCUA
As for NCUA itself, Harper said the agency’s workforce has also become more diverse as the result of a number of initiatives. He reported that in 2021 two out of every five new hires were people of color, and that more than half the participants in its leadership development programs were female. More than four out of 10 contract dollars also went to minority and women owned businesses, he said.
“Those are encouraging numbers, but they are not enough,” Harper said. “We have to do more.”
Diversity Self-Assessment
Harper urged credit unions to do more to measure diversity in their organizations by participating in the agency’s Diversity Self Assessment. He said that since 2016 423 credit unions have “voluntarily and anonymously” submitted their assessments to NCUA. For many credit unions, filling out the assessment has changed a CU’s performance, said Harper, adding that Blacks and Latinos remain underrepresented in management and on boards of credit unions.
By October of this year, Harper said each credit union will receive a custom link to the diversity self-assessment. Those that want to start early can visit www.cu.diversity.ncua.gov.
Minority Depository Institutions
Harper then turned his thoughts to minority depository institutions (MDIs).
“MDIs are the cornerstone of the credit union system and represent one out of every 10 federal credit unions,” Harper said. “They have worked tirelessly for decades to serve a wide variety of underserved communities across the country. The pandemic has shone the spotlight on the important work of MDIs in their communities.”
Harper noted that the total amount of MDI lending grew by almost $3 billion, an increase of 9%, during 2021. The increase exceeded the increase in lending by all other credit unions, and “that’s amazing because it demonstrates MDI credit unions are working within their fields of membership to assist in a more equitable economic recovery,” Harper said.
The chairman added that 49 MDI FOM expansions have allowed more than 1,500 new groups and areas to be added over last several years.
An MDI Challenge
One challenge the agency and the credit unions themselves have faced is comparing MDI performance with other CUs’ performance. Harper noted other regulators do not use peer metrics when assessing MDIs.
“As a result, we are now exploring how we can implement a similar change for MDI examinations to better assess MDI performance in a way that meets your business model,” said Harper.
He said additional information related to that potential change will be announced in months ahead.
Grants & Support
Harper outlined for the AACUC audience the resources the agency has available, but also acknowledged some limits. He said that NCUA, for example, has received $3 in grant fund applications for every $1 it has available for technical assistance grants to help smaller credit unions.
The good news, said Harper, is President Biden has proposed more than doubling funds that would be available for the grants.
“With more funding NCUA would be able to offer not just more grants but greater ways to assist low-income credit unions in fulfilling their missions,” said Harper. “This board is passionate about working together to make sure we are working in communities that need help.
Treasury ECIP Program
Harper praised Treasury’s Emergency Capital Investment Program (ECIP), which he said “aligns with the goals of the credit union movement.”
Harper said 23 MDI credit unions will receive more than $720 million in ECIP awards.
“That capital is going to be there for 30 years. Think about the multiplier effect,” said Harper. “This is patient capital that is going to be a game-changer for advancing economic equity in our credit union system. But we can still do more.”