SPOKANE, Wash.–Six months into his term on the NCUA board, Todd Harper outlined what he said he has observed during his term to date before a group of credit unions here.
Speaking to the Northwest Credit Union Association’s MAXX Conference, Harper touched on points he has raised at other meetings, saying he believes a regulator needs to be fair and forward looking, innovative, risk-focused, ready to act when needed, and appropriately engaged.
Harper said regulators must apply regulations without favoritism, a lesson that was learned the hard way during the most recent economic downturn.
When it comes to being forward looking, Harper said too often regulators look to create rules based on the crisis behind them, and while that can be a good thing, they must also be looking to the risks coming over the horizon.
Harper said a good example of innovation at NCUA is its new MERIT examination system, which will lead to less time with on-site visits by examiners by credit unions.
Other Points Raised
Other points made by Harper during his remarks:
- He said he is partnering with his fellow regulators to look at whether new regulations around fintech are needed.
- Harper said credit unions must be inclusive. The U.S. is changing and credit unions must change with it, he said, stating diversity leads to better service, higher retention, and more, all of which contributes to being more successful.
- He “strongly encouraged” his audience to complete NCUA’s Voluntary Diversity Self-Assessment. He said 45% of NCUA’s contract dollars went to minority and women-owned businesses.
- Harper said he has been working to get in the field and meet with everyone from other regulators to leaders of CUs. He has travelled to 11 states in six months.
“Appropriate stakeholder engagement is so important in understanding new problems, appreciating regional market differences, and in doing the due diligence needed in creating effective new regulation,” Harper said.
Priorities
Harper said his priorities at NCUA include:
- Safety and soundness of FCUs, including a keen focus on capital and liquidity, as well as cybersecurity
- A focus on low income credit unions and the underserved
- Consumer financial protection. “NCUA needs to increase uniformity in our consumer financial protection,” said Harper. “I have found the NCUA’s current consumer compliance program is not comparable to our sister agencies. NCUA’s different approach runs counter to the mission of the FFIEC. Decades ago, NCUA conducted full consumer compliance exams. Over time it has focused more on safety and soundness. I believe the NCUA board should put in place a dedicated program for supervising compliance with consumer financial protection.”
Three Emerging Risks
Harper said he is watchful of three emerging risks:
- Liquidity of FICUs and how they will respond to the next economic contraction.
- Rising consumer debt, with consumers now holding $4 trillion in debt, the highest point ever. “If a recession occurs, it could become unmanageable. Credit unions must take a proactive stance in preparing for such a scenario.”
- Growing federal deficit and public debt. Big deficits can put upward pressures on interest rates, said Harper.