ARLINGTON, Va.—NASCUS sees the growing appeal of the state charter continuing in 2018.
As CUToday.info has reported, there has been a trend toward credit unions switching from a federal to state charter, citing rules they say provide greater growth opportunities.
“NASCUS sees more growth for the state system, which now holds just under 50% of all assets of credit unions—combined federal and state,” said NASCUS President and CEO Lucy Ito. “We see that growth trend continuing, perhaps resulting in states overtaking federals in assets. This indicates that the states are offering a strong, competitive charter option, and ‘creating the environment for innovation to happen,’ according to one credit union CEO.”
Yet there are challenges facing state charters, acknowledged Ito.
“The modern-day mobility of consumers and the ever-evolving perception of ‘community’ will increase credit union interest in interstate branching and FOM modernization,” Ito noted. “NASCUS will place emphasis on educating state regulators and legislatures so that the state credit union charter remains competitive and fosters innovation across the broader, national credit union system.”
Voice For State System
Ito said that a focus for NASCUS in 2018 will be providing a voice for the state credit union system at the national (federal) level, particularly regarding issues and trends with NCUA, and with other federal regulators and agencies, such as FFIEC and Treasury Department, and with Congress.
“In 2018, we anticipate both interstate branching and field of membership modernization to be front and center for both state credit unions and their state regulatory agencies,” Ito said.
Ito said what will be different in 2018 from this past year’s efforts is how the association deals with Congress, NCUA and other federal regulators.
Pivot Toward States
“For example, NCUA will likely have new leadership in 2018, replacing (Board Member) Rick Metsger, whose term has ended, and installing a board member to fill the seat left open by Debbie Matz’ departure,” Ito said. “Our role will be, among other things, to inform and update the new board members about the dual chartering system and the role of state supervisors working with NCUA to ensure a safe, sound credit union system overall.”
Ito added that NASCUs has noticed a pivot by the Trump administration toward the states, and away from centralized power on the federal side, emphasizing more collaboration with states to address and solve issues.
“That’s a key change from the past decade, especially in the wake of the financial crisis,” said Ito. “Further, and importantly, interstate branching has long been an advantage of the federal charter while FOM, largely, has been a state charter advantage. NCUA’s recent modernization of FOM rules for federal credit unions combined with their interstate branching authority will put increasing pressure on state charter competitiveness.”