As Prepared for Delivery on November 6, 2019
Thank you very much for the kind introduction. And thank all of you for joining us today.
Over the last couple of decades, diversity, inclusion, and equity have emerged as major priorities throughout the business world. Most business leaders understand that a diverse workforce and an inclusive workplace are good for performance and innovation and a boost for the bottom line. That recognition is a welcome development.
But if you work in the credit union industry, you might find yourself asking: What took them so long? Because it’s something this industry has been doing all along – credit unions have understood the power of these ideas and practices from day one.
Diversity Equity and Inclusion in Credit Unions
Some of you may have been here just a few months ago when we marked the 85th anniversary of the signing of the Federal Credit Union Act in late June. It is not always easy to see, from today’s perspective, what a revolutionary development that was, in terms of expanding access to safe and affordable financial services.
Just a century ago, it was difficult, or even impossible, for working or even middle-class people to get access to credit. Mortgage loans, commercial lending for small business, consumer credit – these things were not at all common then, as they are today.
That meant that there were an awful lot of Americans who were being overlooked and locked out: working families, farmers, skilled tradesmen, and people of modest means.
But some far-sighted leaders in the business and financial worlds had an idea. They envisioned a system of locally owned and operated, member-driven cooperative credit institutions — founded on the principle of “people helping people” — that would fill that gap, making credit and savings services available to a much wider swath of Americans.
Credit unions would help those underserved communities to get access to credit, and the Federal Credit Union Act, signed in 1934, would help to establish the framework of trust, accountability, and transparency in which those cooperative credit providers could flourish.
From the seed of that idea grew the credit union industry as we know it today, which now serves more than 118 million members nationwide and holds assets of more than $1.5 trillion and counting.
So when credit union people talk about diversity, inclusion, and equity, it is with an understanding that those values are, so to speak, part of this industry’s genetic code. And that is something you can all take pride in.
However, we should not look back on that proud history and see it as an invitation to rest on our laurels. Because the reality is that while the credit union industry has led the way on these issues, and more and more industries are following that lead, we still have a long way to go.
The purpose of today’s summit, which we plan to make an annual event, is to keep the conversation going. We should take pride in this industry’s achievements at elevating the commitment to diversity and inclusion. But there is still a tremendous amount of work that needs to be done.
The Case for Diversity Equity and Inclusion
The question is, why this focus on diversity, on inclusion, on equity? To begin with, it makes solid business sense. At a time when the demographics of the U.S. population are rapidly changing, those industries and organizations that commit to diversity, inclusion, and equity are going to be better positioned to outperform the competition.
For example, McKinsey and Company published a report on the business case for diversity and inclusion last year. They found that, across the board, companies with a strong commitment to these values outperformed the competition. To take just a few examples:
- Diverse companies were better at attracting and retaining top talent;
- They enjoyed superior financial performance, including profitability; and
- They had higher levels of employee satisfaction.
So there’s a strong and compelling case to be made in business terms. But I also believe there’s a strong moral imperative here: We should be encouraging more diversity and inclusion in the credit union industry not simply because it’s good for business — but because it’s the right thing to do, and the responsible thing to do. We all benefit when more of our fellow Americans are able to contribute fully.
For me, these discussions of diversity, inclusion, and equity are more than simply abstract ideals — they’re something I believe in deeply and personally, owing to my own background.
I’m proud to be the first African-American head of a federal financial regulatory agency. But getting here was not easy, and I’ve worked in the financial services industry long enough to know how challenging it can be for members of under-represented communities.
In my banking career, I’ve attended conferences and professional events where I was the only man of color in the room. I’ve shown up early to speak on a panel discussion, and people were surprised to learn that I was a participant.
And many of us have been on the other side of that as well – say, working for a manager who expects less of you because of your skin color, your ethnic background or your gender. That doesn’t necessarily stem from a sense of hostility or trying to undermine you. In many cases, they may even think they’re trying to help you. But they don’t realize they would be helping you more by challenging you to work up to your potential and to achieve more.
We’re not talking here about the distant past. We’re talking about within just the last few decades, in the post-Civil Rights Act years. We can all be pleased that things have come such a long way even since the 1980s or 1990s. But there’s much more that needs to be done.
A Broader Understanding
In my talks with industry groups around the country, I always tell them that our commitment to diversity, equity and inclusion needs to be conceived more broadly, particularly when it comes to our concern for financial inclusion for underserved communities.
So, of course, we need to focus on reaching out to traditionally underserved ethnic communities — African-Americans, Native Americans, Hispanic-Americans — both in our services and in our hiring. And, of course, we should have more women in places of leadership and in boardrooms. But our commitment to diversity and inclusion should go further. We need to consider the other dividing lines in our society, and how we can cross those lines to serve others better.
For instance, age is one of those dividing lines. We know younger Americans are more likely to lack access to reliable credit and financial services, compared to seniors. Are we doing all we can to get younger Americans into the financial system?
Often accessibility is a dividing line. Are we doing all we can to improve access to the disabled, who have special needs when it comes to financial services and products? What about military veterans, active-duty personnel and their families? As a highly mobile population, with frequent relocations and deployments on short notice, they often face unique and atypical challenges when it comes to financial needs.
What about rural communities? Increasingly, where you live is one of the dividing lines. Especially over the last decade, the withdrawal of financial services providers from rural America has posed a serious threat to financial access for the people who still live there. When communities lose financial access, it’s like cutting off the local economy’s oxygen supply.
All of these are examples of how we need to conceive diversity and inclusion in broader terms. And again, credit unions can be a particularly powerful tool to meet the needs of those communities.
It would be easy for us at NCUA to host a summit like this every year, and for me to give a nice speech about the importance of diversity, equity and inclusion, and then we go home feeling good about ourselves for having done our part.
But this is just the starting point. The conversations we are having today will only matter if they are followed by concrete action.
Now, when it comes to what that specific action needs to be, I don’t intend to tell you what to do. When it comes to advancing these goals of diversity, inclusion, and equity, I believe the most important thing that we can do at NCUA is to provide industry leaders with the tools and support you need to think through these challenges and make your own decisions. Then you can follow through with developing plans that work best for your institutions, your members, and your communities.
So, for example, on the NCUA website, we have a great tool for credit unions in the form of our Annual Voluntary Credit Union Diversity Self-Assessment. It lists a set of best practices for assessing your workforce development, your procurement practices, your transparency practices, and so forth. The assessment can give you a fuller and more objective picture of how your institution is meeting its diversity targets, or how you might improve in your inclusion efforts.
We also have an outstanding guide for credit unions that would like to enhance their supplier diversity. We know that developing procurement channels with a broader range of suppliers can help to increase competition, boost innovation, and lower costs. So our guide can be a helpful roadmap for credit unions that want to develop more diverse relationships in their supplier networks.
And we are also striving for ways to lead on these issues by serving as a model. This is why I am pleased to announce today that I am establishing an NCUA Culture Council to focus on issues of inclusion within the agency. Diversity is important, but without cultural change that encourages true inclusion, it risks being little more than checking the right boxes. The NCUA Cultural Council will serve an important advisory and policy-making role within the agency to ensure that inclusion and equity are top priorities. I look forward to reporting to you on the council’s progress in the future.
Conclusion: The Way Forward
Since I was sworn into this job seven months ago, I’ve traveled all around the country meeting with industry groups. I have been to more states than I can count right now, and I have talked to literally thousands of credit union leaders, employees, regulators, and members, and I have shared this message with them. I am heartened and reassured by the fact that this message is so well received everywhere I go. This is a promising sign.
When we talk about the need for diversity, equity and inclusion, I want these principles to be viewed as forces that bring us together. Diversity, equity, and inclusion should be sources of enrichment, strength and unity, not division.
Earlier I alluded to the credit union industry’s historic leadership on these issues of diversity, inclusion, and equity. I believe credit unions can, and should, continue being the leading edge on this front, and they can continue serve as a positive example for other industries. I am proud of the credit union industry for its long and honorable commitment to these principles throughout its history.
But we must take that longstanding commitment as a challenge to go further and to continue doing better. Simply put, the commitment to diversity, inclusion, and equity must be part of this industry’s cherished value of “people helping people.”
Many of you are probably familiar with the management thinker Peter Drucker, who believed that true leadership is manifested not in our stated intentions, but in the results we achieve. Drucker believed, and I quote, that “Unless commitment is made, there are only promises and hopes — but no plans.” Drucker also said, “Plans are only good intentions unless they degenerate into hard work."
My great hope is that with the conversation we’re starting today, we’ve articulated our promises and hopes for greater diversity, inclusion, and equity in the credit union industry. The next step forward is to affirm that commitment by creating the plans that will bring those promises and hopes to fruition — and then start the hard work of making these aspirations a reality.
I look forward to working with all of you. Thank you.