ALEXANDRIA, Va.–With one board member saying such a move is part of “credit union DNA,” the NCUA board has approved the so-called Second Chance IRPS,” a loosening of rules to allow more people with minor criminal transgressions in their past to be hired by credit unions
A priority of NCUA Chairman Rodney Hood, what is officially the Proposed Interpretive Rule and Policy Statement, Guidance Regarding Prohibitions Imposed by Section 205(d) passed 3-0, and gives credit unions far more discretion to hire people they might not have in the past. The new rule reduces the number of individual cases the NCUA board must review and approve before someone can be hired, largely delegating such authority to the agency’s regional offices. No more will credit unions need to get a waiver before hiring someone who has bounced a check or had a simple drug possession charge on their record, for instance.
Dozen Comments
NCUA staff said the agency received 12 comment letters on the proposal, one of which came from a provider of fidelity bond coverage that addressed one concern raised earlier, that that cost will now rise. The company indicated that is unlikely as a result of the new rules, which were first proposed in July.
Agency staff and board members all said they believed people convicted of minor offenses such as bouncing a check for a small amount or simple drug possession or a minor offense as a young adult should not be prevented of working in a credit union.
One change in the final rule from the proposal is removal of language referring to “federally insured” credit unions.
‘Redemptive Spirit’
In remarks prior to the vote, Hood said there are 77-million Americans with some kind of criminal record who represent little to no risk to society as the result of a “foolish” mistake in their youth that now prevents them from gaining full access to “economic mobility.” He called giving those who have taken responsibility for their actions “consistent with “America’s redemptive spirit.”
In the ‘DNA’
Board Member Todd Harper said credit unions often help their members to get on the “right footing,” and that the policy statement change will “allow credit unions to do the same thing with their employees. Second chances is in credit unions’ DNA.”
An ‘Albatross’
NCUA Board Member J. Mark McWatters added that “we live in a very puritanical society in many respects” that implements a “financial death penalty” on those who have committed a “youthful indiscretion. Something that happened decades ago is still haunting them. That small indiscretion is an albatross around your neck for the rest of your life. Let’s do something about that today.”
NAFCU's Stance
Following the vote, NAFCU stated it appreciates NCUA modifying its IRPS policy, but shared concerns.
"As community-based, not-for-profit cooperatives, credit unions want to serve their communities by giving second chances to qualified individuals who may have made a youthful mistake and have since paid their debt to society,” said Ann Kossachev, NAFCU director of regulatory affairs. “With nearly one in three Americans having been arrested by the age of 23, the NCUA’s IRPS would expand employment opportunities to qualified candidates with minor criminal records who would not pose a safety or soundness risk. Additionally, this decision will place the NCUA’s policies and practices on par with other prudential regulators. However, NAFCU has some concerns about its effect on fidelity bonds and insurance rates for credit unions. We will continue to monitor this issue as the policy becomes more widely implemented and work to ensure credit unions are not disadvantaged financially because of their willingness to help their communities.”