As Prepared for Delivery on March 3, 2021
Thank you very much for the kind introduction. It’s my pleasure to join you today.
I would like to focus today on the future – but to do so, I’d like to start with a look toward the past. In looking back on my remarks from last year’s conference, one thing that stood out to me was that I hadn’t covered pandemic risks. Nor was the looming crisis a major part of the overall conference agenda. We were all aware of the virus, of course, which had been in the news for weeks. In fact, the White House had formed a task force to address the virus weeks earlier on January 29. And by mid-March, of course, we would find ourselves facing a full-fledged public health emergency and a severe economic crisis.
Lessons in Humility and Resilience
I recount these facts from 12 months ago, which now seems like years ago, not as an exercise in criticism or second-guessing – but as an exercise in how important it is to recognize the limits of our knowledge.
Had we understood how serious things would get, and how rapidly, I certainly would have made the pandemic response the principal topic of my remarks last year, and I am guessing that CUNA would have cleared the planned agenda to make it the main topic of the 2020 conference. In fact, we might very well have agreed to cancel that gathering, given the severity of the risk.
A critical lesson we should take from the events of last year is that humility and resilience are vital to surviving and thriving in today’s world. When I say “humility,” I mean the importance of admitting that our knowledge and perspective are limited, and that we usually do not predict the future with clarity. By that standard, 2020 was a profoundly humbling year for all of us.
And when I talk about “resilience,” I’m talking about being prepared to respond effectively to any eventuality. Our entire system faced a monumental “stress test” last year: our government was tested; our health care system was tested; the private sector and your institutions were tested; our communities and families were tested.
Those tests revealed a great many weaknesses in our system, the pandemic also revealed our strengths. I certainly saw those strengths, that sense of resilience, in the credit union industry’s response to the COVID-19 challenge. Your institutions stepped up, assessed the changed situation, and adapted to an extraordinary and unprecedented situation with purpose, resilience and creativity. When the CARES Act was enacted and credit unions were called upon to distribute funds under the Small Business Administration’s Paycheck Protection Program, this industry delivered, making more than 171,000 loans to entrepreneurs and small businesses that were in urgent need of credit to keep their doors open.
As a result, the initial economic damage from the pandemic, though severe, was at least blunted, as your members were able to maintain access to credit and the financial services they need. And there may be promising signs that the economy is on the road to recovery, but we should not be complacent – we’re still assessing the damage and much of the economic damage could be forthcoming so we’re not out of the woods yet.
A Fresh Start—and What to Expect
But the new year brings an opportunity for a fresh start. While the pandemic remains a matter of great public concern, the arrival of the first vaccines has been reassuring. We can certainly hope that brings us closer to the point where the virus is under control, as we all want.
So I caution everyone to be optimistic, but at the same time to be aware of the potential risks. The pandemic and economic challenges haven’t gone away, and we’re going to be struggling to tame both of them for some time.
What should credit unions expect going forward? First, while we’ve taken steps to provide relief to help your institutions weather the pandemic storm, we certainly will look to other forms of relief that may be needed.
We’re also watching closely to determine what additional support may be needed for smaller credit unions and minority depository institutions in the months to come. The credit union industry responded well to the stresses of the last year, but many institutions were left more vulnerable than they would otherwise have been, and so closures of financial institutions, with the attendant systemic risks, are always a possibility. Should that occur, we need to be prepared to respond appropriately to ensure the safety and soundness of the larger system – again, a lesson in resilience. In responding, it will always be my preference to save institutions rather than merging them.
Beyond that, we will continue to support the industry in key areas like providing regulatory relief and encouraging financial inclusion. These are critical priorities that I expect to continue working on.
Among those priorities is moving forward with the new rule to expand lending authorities for Credit Union Service Organizations. We’re accepting public comments on the proposed change, which I believe is timely and necessary to respond to technological changes in the industry and to better meet your members’ needs. This rule also would allow credit unions to invest in non-credit union owned fintech companies, something that I think it critical in today’s marketplace.
I was particularly proud of establishing the Director of Financial Technology and Access position at the NCUA, which will focus fintech needs inside and outside of the agency. We recognize that fintech is going to play a growing role in financial services in the years to come, so we want to be prepared to address it so that these innovative technologies can be effectively integrated with the needs of the credit union system.
A top concern of mine will be to do everything we can to support the credit union industry’s ability to address those financial inclusion priorities. You’re all aware of our launch of the ACCESS initiative last year. That stands for Advancing Communities through Credit, Education, Stability and Support, which are the key pillars we’ve identified to get more of the unbanked and under-banked into the legitimate financial system.
You all have heard me say before that financial inclusion is the civil rights challenge of our time. And with roughly 14 million adults lacking access to affordable, quality financial products and services at a federally insured institution, it’s a challenge that requires urgent action. I believe the credit union industry should be at the forefront of addressing that challenge.
The bottom line is this: We have nearly 5,100 credit unions across the nation, boasting a strong reputation for customer service and a historical commitment to helping members to achieve their desired level of financial performance. But we must put the infrastructure in place to allow credit unions to complete in a digital world. The brick and mortar banking of the past is not necessarily the future of banking, and I look forward to working with all of you to leverage fintech to help reach more marginalized and under-served communities.
Changes and Challenges in 2021
Finally, I’d like to address the recent changes at the NCUA. When I addressed the GAC last year, it was as the Chairman of the agency. But we know all good things come to an end, and with the change of administration, my colleague Todd Harper recently assumed the Chairmanship. It was a tremendous honor to serve as Chairman from April 2019 until this year, and I congratulate Chairman Harper on the appointment. Todd is well positioned to hit the ground running as Chairman, giving his past experience as a Board Member and as a former NCUA staffer. I have worked with Todd and his office to make sure the transition was a seamless as possible, and I look forward to working with Todd.
I’d also like to congratulate Vice Chairman Hauptman on the impact he has made since his arrival at the agency. During his Senate confirmation hearings, Kyle said he would make new credit union charters a priority, and since his arrival, his office has led the way on this issue. As the Vice Chairman has said, one of the greatest threats to the system of cooperative credit is no new entrants to the marketplace. I fully agree with the Vice Chairman.
The NCUA had one new charter last year. Only two are planned for this year. These data are, quite frankly, unacceptable. The agency can make it incredibly difficult to get a new charter. We aren’t saying chartering a credit union should be easy, but it shouldn’t feel impossible for many organizing groups. I look forward to working with my Board colleagues to make sure the NCUA does our part to significantly streamline and simplify the process of chartering. But we also ask the cooperative system to do your part to lay the groundwork for more credit union start-ups because a system with almost no new start-ups is not sustainable.
With a new Chairman and Vice Chairman at the NCUA, the great consolation for me is that even though I no longer hold the gavel, I have the opportunity as a Board Member to continue working on the issues I’ve always focused on. So you can expect I’ll continue to push for the values I’ve worked to advance throughout my time at the agency, and indeed throughout my career.
If you want to know where I’m going, then take a look at where I’ve been. While I was Chairman, I put forth a number of issues that I believed were strong policy and made sense. That hasn’t changed: so I’ll still keep pressing for the same issues and work hard to bring them to fruition along with my fellow board members.
In January, we published a select listing of the NCUA’s accomplishments over the term of my Chairmanship. A review of that list shows that among my principal concerns were regulatory relief; support for entrepreneurship and small business; financial inclusion; and encouraging a stronger commitment to diversity, inclusion and equity both at the NCUA and in the larger credit union community. Those issues will continue to be areas of interest and concern to me and my Board colleagues.
But what’s more important than the accomplishments during my Chairmanship, is the accomplishments of credit unions. In 2020, even in the face of the global pandemic, credit unions had an outstanding year. Credit unions were able to change course in the middle of a global pandemic and found ways to serve their members. In 2020, credit unions helped members improve their cash flows with refinancings and lower rates and fees. That’s something this industry should be proud of.
I mentioned earlier that the challenges we faced in 2020 revealed both strengths and weaknesses in our system. That knowledge clarifies for us what our challenge needs to be in 2021 – we need to address our weaknesses and shore up our strengths. That’s going to require working together. There’s an old bit of wisdom from the great automotive innovator Henry Ford that I like to quote: “Coming together is a beginning; staying together is progress; and working together is a success.”
That brings us back around to the fundamental lesson I began with today: the importance of humility and resilience. Those two fundamental values, humility and resilience, are at the root of working together. Because we need to have the humility to understand that we can’t do it alone – we have to be prepared to come together and work together at the community level if we hope to achieve anything. And that sense of collaboration, of shared purpose, and of mutual support, is where we will find our resilience.
Those ideas are encapsulated perfectly in the longstanding credit union mantra of “people helping people,” and I can’t think of a better principle to guide us as we undertake the hard work of rebuilding in 2021.
In closing, as we rebuild, I encourage the credit union community to reach out to me directly with your ideas and thoughts at BMHood@ncua.gov. Again, that is BMHood@ncua.gov. Information at 1775 Duke Street in Alexandria, Virginia, can get filtered by the time it reaches the Board level, so it’s important for me to hear directly from credit unions. I look forward to hearing from you.
Thank you very much.