As Prepared for Delivery on August 11, 2021
Thank you very much for the gracious introduction and the warm welcome.
I was looking back to the last time I spoke to the DCUC, at the August 2019 conference, which at this point seems like the distant past, given how much has happened in the last two years. At that time, I spoke of the importance of things like diversity, equity, and inclusion, especially financial inclusion, which you’ve heard me describe as the civil rights challenge of our generation.
Two years later, I still talk about those issues, every chance I get. But what I find very encouraging is that, in a fairly short time, our context has changed so dramatically that I’m even more optimistic about the possibilities for what we can achieve in these areas.
Toward the end of 2020, I started speaking to the leadership team at the NCUA and our employees about the “silver linings” of the COVID-19 pandemic. At that point the first vaccines were becoming available, and while we still had a long way to go – and still do have a long way to go – it was becoming possible to think about the future with more clarity and confidence. So, we wanted to pinpoint some of the lessons learned from that hard experience.
Today I’d like to focus on a few of those silver linings we see after the hard challenges of the last 18 months because I do believe the lessons we’ve learned from this global “stress test” will go a long way toward helping us to strengthen not only the credit union industry and the larger financial services industry, but also our communities and our larger society.
I know I don’t need to recount the facts of those last 18 months: a global pandemic; a sharp and sudden economic retraction; widespread public demonstrations for justice in the wake of George Floyd’s killing in police custody in Minneapolis; political division; and so on. We’re all familiar with those facts, and I prefer to focus on the future.
However, I do want to pause to salute your institutions for a job well done. Facing an unprecedented challenge in the spring of 2020, credit unions leaders and employees stepped up to do what needed to be done. That was no easy task: it required courage, creativity, and resilience, and a fair amount of improvisational risk-taking in a climate of deep uncertainty, to keep the system running. But you continued to provide essential and affordable financial services to your members, and kept credit flowing to homeowners and small business owners. There’s no question in my mind that the actions taken by this nation’s federally insured credit unions served to lessen the effects of the pandemic and the economic shock. Credit unions should be proud of their performance during the COVID-19 pandemic.
If anyone asks me how the credit union industry has fared over the last 18 months, I tell them to look at the numbers. In the last quarter, federally insured credit unions reported net income growth of $11.3 billion, an increase of 134.9 percent over the year ending in the first quarter of 2021. Insured shares and deposits rose $286 billion, or 22.4 percent, to $1.56 trillion over the same period. That’s coupled with loan growth and lower delinquency rates. We’re still keeping an eye on some smaller credit unions to ensure they’ve weathered the storm, but on the whole the industry has come through with flying colors. And that’s not just good news for the industry, but for your members and your communities.
Progress on Diversity and Inclusion, and Next Steps
So, the question is, what’s next? How do we build upon these successes and keep up the progress? How do we continue to enhance the resilience of the industry in the face of risk and uncertainty? I would suggest that, first, a continued focus on regulatory reform, and, second, a continued commitment to working toward a more diverse and inclusive economy are essential.
I think you all know my thought on regulatory reform, and that I believe the regulatory system should be effective without being excessive, so I’ll set that aside for the now, though I’ll be happy to discuss any of those issues in our question and answer session to follow.
For our purposes here, I’d like to focus on the issues of diversity and inclusion, and especially financial inclusion. These are priorities where I believe credit unions are already making a difference and can continue to do so. You might think of this as a “progress report” on how far we’ve come in two years, and where we need to go next.
First, we need to continue to strive toward greater levels of diversity, equity, and inclusion within the industry itself. While serving as chairman of the NCUA Board from 2019 until earlier this year, I knew we needed to provide a positive model on those issues if we expected the industry to follow our lead, we needed to “walk the walk,” as the saying goes. I put those issues at the center of my chairmanship, and we’ve made some solid progress.
For instance, according to the NCUA’s Office of Minority and Women Inclusion annual report published this spring, 41.5 percent of the agency’s new hires in 2020 were people of color. In addition, 2020 was the year that we achieved gender parity in our senior executive staff for the first time. Moreover, roughly a third of the NCUA’s total reportable contracting dollars in 2020 were awarded to minority-owned or women-owned enterprises. I’m proud of those achievements within the agency, and pleased that my successor, Todd Harper, shares that commitment to diversity and is working to continue the progress.
Moreover, we’re leading the way in encouraging the credit union industry to advance diversity, equity, and inclusion goals. In 2019, I pushed to establish the NCUA Diversity, Equity, and Inclusion Summit as a forum where credit union leaders could come together to share best practices and address challenges to advancing diversity in an open, supportive environment. That’s now an annual event, with the next summit to be hosted in November.
Of course, I should emphasize that when I talk to this organization about diversity and inclusion, I’m preaching to the choir because the DCUC has been leading on these issues for a long time, due to the fact that your membership base tends to be so diverse.
That’s why I was pleased to learn that so many DCUC member executives are taking part in the African-American Credit Union Coalition’s (AACUC) Cross-Cultural Exchange Program (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) , which is a very promising pilot program to enhance the dialogue, and more importantly, the follow-through on diversity issues in the credit union industry. I’d like to thank Tony Hernandez, who represents DCUC on the exchange program’s steering committee, for his leadership on the committee. I’d also like to thank other members who are on the steering committee. Are there any other steering committee members here with us today?
It’s also my understanding that Renee Sattiewhite, the president and CEO of the AACUC, is with us today. Is Renee here? Thank you very much for your hard work on these issues, Renee.
And when we talk about diversity, equity, and inclusion, I also emphasize that we’re not talking simply about race, ethnicity, and gender, though those are critically important. I also urge people to think more broadly about diversity and inclusion, especially when it comes to our efforts at increasing financial inclusion in our society. Are we doing all we can to help Americans with disabilities or differently abled gain access to the financial system? What about older Americans who may need more protection from financial predators? What about people in under-served areas, whether rural or urban, who lack ready access to affordable financial services and products?
Again, these are all areas that I touched on two years ago, but what’s changed is that there’s more awareness of the need to address financial inclusion more broadly, and I welcome that evolution. Just based on what I hear from many people in this field — not only credit union leaders, but others within the broader financial services industry — there’s a growing consciousness that inclusion belongs at the center of our mission. Moreover, people are coming to understand that these issues aren’t just a “nice thing to have” — something to be bragged about in the annual report — but also a key part of the financial services industry’s business model.
At the NCUA, we’re doing everything we can to support that effort. One step we took last year at NCUA under my chairmanship to address inclusion was launching the ACCESS initiative, which stands for “Advancing Communities through Credit, Education, Stability & Support”. This is an agency initiative to develop policies and programs to enhance inclusion within the credit union system, by expanding access to financial services; financial capability training for underserved and diverse communities; and employment opportunities. It does include components in support of military personnel and veterans, so I’d urge you to take a closer look at ACCESS to see how your credit unions and members might benefit.
Likewise, we’re continuing to do everything we can to promote and preserve minority depository institutions, which we all know are critical to the goals of advancing financial inclusion and the economic well-being of minorities and underserved communities. MDI credit unions represent roughly 10 percent of federally insured credit unions. The NCUA has and will continue to find more avenues of support for these institutions so much-needed capital can flow into overlooked or underserved areas.
I’ve also been encouraging credit unions to look more closely at the opportunities for innovative financial technology solutions to bolster financial inclusion. Naturally, we think of fintech as an innovation that will improve efficiency and respond more readily to the consumer market. So, a lot of your institutions may be experimenting with mobile banking, digital wallets, crypto-currencies, financial data aggregation, and other services, which I endorse.
But let’s also think about how fintech can be used to reach people who don’t have access to financial services. To me, this is truly the most exciting and interesting potential that these technologies present. Can fintech tools help us reach people in under-served rural areas where traditional banks have pulled out because of population decline? Can fintech help us to target entrepreneurs who need a small credit boost to get a micro-enterprise off the ground? Can fintech help to boost financial capability so unbanked Americans are more comfortable joining the financial system? The answer to each of these questions, I hope, is “yes.”
I’ve covered a lot of ground here today. But in doing so, what I hoped to illustrate for you was just how much progress we have made on these issues since I last spoke to you two years ago. We’ve still got a lot of work to do, but we’re moving forward, and I urge you to keep up the progress.
I started this talk by pointing at “silver linings,” and there’s one other valuable lesson I’d like to note: in the importance of communication and collaboration when it comes to navigating uncertain times. As Chairman of the NCUA last year, I made it a top priority to communicate regularly, reliably and with great clarity to the industry, to our employees, to Congress, to the public, and so forth. And I was tremendously thankful to the credit union industry, as well, for your frank and frequent feedback on what we needed to be doing better.
To take just one example, the support and advice we got from defense credit unions was absolutely essential last year when we changed our approach to how we consider military personnel when assessing low-income credit union designations. That was an example of regulators and industry working together in a constructive way to deliver a result that makes a difference for your members.
I’d like to build upon that record of success by creating more avenues for open communication. That’s why I recently urged the NCUA Board to establish an Advisory Board, to create a more formal channel for industry leaders to share ideas and feedback with us. We need to do a much better job getting feedback directly from credit unions in a formal setting where people do not feel they will be reprimanded for giving honest feedback. I’m hoping this is something we can get started soon, because it will help us to continue improving our working relationship, while ensuring the safety and soundness of the industry. In the meantime, I hope you’ll continue to keep us posted on what we can do to help you serve your members better.
When I talk about silver linings and my optimism for the future, I’m not trying to paint a pretty picture or ignore the real challenges we still face. But we know we need optimism to address the challenges we face. I’ll remind you of the great observation from General Colin Powell that “Optimism is a force multiplier.” When I encourage people to be optimistic, it’s always with the awareness that we should temper our optimism with a sense of reality about the facts of the grounds.
So, for example, we know that while we’ve made tremendous progress in countering the spread of COVID-19, the spread of new variants makes it clear that the pandemic continues to be a real risk. And while the economy has made great strides toward recovery, we know we still have much work to do to restore what has been lost, and to ensure that the economy is working for all Americans.
So yes, we still face challenges, but I believe that by focusing on continued progress on diversity and inclusion, and by maintaining a commitment to open communication, we can overcome those challenges and many others. I look forward to working together with all of you in that mission. Thank you once again.