As Prepared for Delivery on May 7, 2020
Good afternoon, everyone. It’s a pleasure to join you today. Thank you, CUNA, for having me.
I’d like to talk for a few minutes today about an issue that’s close to my heart: financial inclusion. Since I was sworn in as NCUA Chairman last year, I’ve made it a top priority to find ways to better meet the needs of unbanked and underbanked Americans, who lack reliable access to quality, affordable financial services.
Many of you have heard me speak about financial inclusion as the civil rights issue of our time, so you know it’s been a longstanding commitment in my career, both in my private sector work and in my public service.
I know that’s a commitment we all share. We all recognize how important it is for Americans at all income levels to have access to affordable financial services, so they can meet their financial obligations; achieve important personal and family goals like buying homes and educating their children; and work toward financial independence by saving, investing, and building assets for their families’ future. These are the building blocks that form the foundation of thriving households, families, and communities.
There’s no single solution, however, to address this challenge. Expanding financial inclusion requires ongoing commitment and engagement on a number of fronts, which is why it’s always good news when we find innovative ways to better serve the needs of financially underserved populations, moving us a little closer to our goal of expanding financial inclusion and shared prosperity.
Since so many military members are just getting started in their professional careers, including some who just graduated from high school, they may not have much experience in working with financial institutions — at least not yet. Currently, NCUA encourages higher education by counting students in our methodology and today, I am pleased to announce that the NCUA has determined we can encourage military service in a similar way.
Today’s announcement will help credit unions better meet the needs of our men and women in uniform. I want to especially thank the Office of the General Counsel for working to get this implemented at my direction. During today’s call, we’ll also be hearing from the NCUA’s Office of Credit Union Resources and Expansion as well.
I’d like to share some background on this issue. We know that when we’re talking about active-duty military personnel, we’re talking about a population that faces some unique challenges. For instance, it’s a population that’s highly mobile, with frequent transfers, both domestically and internationally. That mobility can pose financial strains, especially if it means a career disruption or job change for a spouse or partner. And if we’re talking about enlisted personnel, especially, who may be younger and at the beginning of their careers, they are likely to have not yet had the opportunity to accumulate substantial levels of assets. So anything we can do to help address those challenges is a step in the right direction.
Typically, we estimate member earnings using the most current census data only for those members with valid physical addresses. And since we use physical street addresses when determining low-income designations, service members using military addresses have been omitted from the qualification evaluation.
Today, I am delighted to announced that military members will be included in the low-income designation analysis. We will issue guidance with additional information about the updated methodology and additional options credit unions will now have to incorporate their military members in the low-income designation process.
Today’s announcement is a great step in being more inclusive when it comes to the members of the military, but we can and will do more to promote financial inclusion.
With this updated method, more institutions are now likely to qualify as low-income credit unions. Some institutions on today’s call perhaps. That means these eligible institutions will have greater flexibility in small business lending, access to grants and low-interest loans from the Community Development Revolving Loan Fund, and the ability to obtain capital from additional sources, and non-member deposits.
I’m pleased to share this announcement today because May is Military Appreciation Month, an annual observance and celebration of the contributions that our military personnel, both in and out of uniform, make to American life. So it’s timely and fitting that we should be discussing these changes now so we can show our gratitude toward those who have answered the call to serve and sacrifice on our behalf. We’re proud to take these steps to help protect them, their families, and their financial well-being.
And while today’s announcement focuses on military personnel, we’ll also be watching to determine if there are lessons we might learn from this process that will allow us to reach other populations. Again, we need to look at financial inclusion not as an endpoint, but as an ongoing process that we continue to work through.
Finally, I’d like to point out that today’s announcement is further evidence that, although our nation is facing a serious public health emergency that demands much of NCUA’s attention, that doesn’t mean we have to come to total standstill. As I’ve said before, the NCUA is still open for business, still looking ahead, and still working to ensure the safety and soundness of the industry. And, we want to give you the resources you need to grow and expand to serve more hardworking Americans.
For example, we’ve made available $4 million in loans and $1.375 million in grants for low-income credit unions, and $125,000 in mentoring grants for minority depository institutions. In today’s challenging environment, the credit union industry should continue looking for ways to innovate and to expand financial services to more members. Where it’s appropriate, we want to empower you in that undertaking, while continuing to work to ensure the safety and soundness of the credit union industry. While we have challenges ahead of us, both in terms of overcoming the COVID-19 public health emergency and restoring our great economy, I know that we can meet those challenges with the cooperative spirit and ethos of ‘people helping people’, which has guided this industry since the very beginning.
Thank you very much.