AURORA, Colo.–NCUA Vice Chairman Kyle Hauptman discussed his priorities, views on blockchain, CECL and more during a “fireside chat” here.
Hauptman participated in the Q&A with Tony Boutelle, CEO of Origence, during Origence’s Lending Tech event here.
Here is some of what was discussed:
Boutelle: What are your priorities?
Hauptman: The chartering process for de novos is one. I’m very pleased to say we have streamlined that. Just to make it clear, I think this is an inclusion issue. If we’re making it harder (for groups) to have their own credit union and to start their own financial services provider, we should not talk about financial inclusion (within NCUA).
The other thing for me is customer service. I said, ‘Why don’t we do some things, like allowing credit union to record the exit interviews.’ And we have an Uber style (feedback solution that asks five questions about NCUA service).
Boutelle: How is that going?
Hauptman: We did a pilot with yes/no questions. We are a monopoly service provider. Any monopoly tends to provide poor products at high prices. But the pilot went pretty well. I’m pleased that the people who pay us get quality customer service.
And please, please, please, for federal charters, please record (the exit interview). I think it has eliminated a lot of miscommunication. And you can call up your examiner later and say what did you mean by this phrase? So it’s very useful.
My third priority is blockchain and crypto. My true north as a regulator is to make sure credit unions don’t become the Blockbuster of financial services because your regulator didn’t let you experiment with ways to help your members and stay relevant.
Boutelle: We really appreciate the new CUSO role. As we kick off CUSO financing, where do you think the CUSO rule will evolve?
Hauptman: There were those who had concerns around consumer protection. But this is just adding a new way to buy a car. You can still buy one the old way if you want to. Adding a new way should improve the customer experience. We are always open to amending (the rule). If we got it wrong and somehow there is consumer abuse, we can tweak it. Chairman Harper voted against it. I told him if you’re right, we can amend it.
Boutelle: As we head into what may be a recession, is there anything NCUA has as priorities for rest of year?
Hauptman: It is a weird economy right now. It’s the first time in my life inflation is an election issue. We may have a recession coming, but we also have huge job growth.
So, car prices go from 22 grand to 29 grand. We will be looking at that. The good news is that unlike the last recession people have a lot of home equity. So, even if someone lost their job it won’t be like ’08, they can just sell the house. And the balance sheet of the credit union system shows we have saved for a rainy day.
Boutelle, reading audience question: Do you feel that CECL is an improvement to our current accounting system?
Hauptman. No. If it were, you would have been free to apply it anytime you wished. CECL is from FASB and FASB is driven by the SEC. CECL is for investors. That’s the whole point of it. Credit unions don’t have investors. The whole point is to give disclosure to investors, and I don’t think the juice is worth the squeeze.
Boutelle: But there is a lot of subjectivity to CECL.
Hauptman: There is. But CECL is the law. Congress has passed it. The spirit of it is just to mark down things ahead of time. The notion that a loan might not be paid back in full I don’t think is news to anyone here. It’s subjective by nature. The same people who made these loans are going to guess what the expected credit loss is. It’s not magic. It’s going to be marked down by the same people who made the loans. We have tried to make it as clear as possible around what is necessary to satisfy it.
Boutelle: NCUA did issue a letter on crypto. What do you see for the future of crypto as related to credit unions’ role in it?
Hauptman: Blockchain is the underlying technology for crypto, and the guidance we put out said that if something somehow involves blockchain, that is not a reason to say no. Blockchain is OK. Credit unions, you have a head start. The FDIC and the Fed (have indicated a lack of support). With crypto and investing, do it if you want and you can do it through your credit union. But the main thing is the technology, blockchain. The down market is a good thing. A lot of bad (companies) have gotten cleared out in recent months. The dot.com crash didn’t mean this new thing, the Internet, wasn’t the right thing. The underlying technology (blockchain) has a number of uses and even things we cannot even think about.