As Prepared for Delivery on November 18, 2021
Thank you, Melissa, for your presentation of the agency’s proposed 2022–2026 strategic plan. The Office of Chief Financial Officer did a masterful job of working with all three Board offices to produce this consensus strategic plan. Well done!
I also thank my Board colleagues, Vice Chairman Hauptman and Board Member Hood, for working with me on climate financial risk and for their other suggestions — which were incorporated into this draft.
For any organization, strategic planning is an essential process for outlining where the organization is going, how it will get there, and what investments are needed to achieve organizational goals. For an insurer, prudential regulator, and consumer financial protection supervisor like the NCUA, a strategic plan is also a vital part of good governance.
The nature of the credit union system and the financial services sector is changing rapidly. Technology is playing an ever-increasing role in financial services, and credit unions must contend with new competitors and product substitutes. Many credit unions are also growing in both size and complexity. Our work must adapt to each of these new realities.
Additionally, we must continue efforts to expand access to safe and affordable financial services, provide financial education, and close the racial wealth gap. We must also address demographic and economic trends. And, we must continue to address the economic fallout of the COVID-19 pandemic, which will likely have lasting effects for some time to come.
The proposed strategic plan considers each of these matters and the potential risks they pose to our programs and the broader credit union system. The draft plan also includes sample performance metrics to achieve its strategic goals and objectives.
I am pleased to see changes to the agency’s mission and vision statements. The agency’s strategic goals have also been updated to reflect our new mission. For 2022 through 2026, our draft strategic goals will be to:
- Ensure a safe, sound, and viable system of cooperative credit that protects consumers.
- Improve the financial well-being of individuals and communities through access to affordable and equitable financial products and services.
- Maximize organizational performance to enable mission success.
These new statements reflect the collective goals and priorities of all of us on the NCUA Board.
Before I conclude, I would like to address the climate financial risk issue. Data about extreme weather events and climate risk shows that climate change is accelerating, and the number and costs of climate-related natural disasters is rising.
The markets are already responding to this change. For example, some of the largest participants within the financial services industry have begun adjusting their business plans and have committed to achieving net-zero carbon emissions in their activities.
The NCUA Board recognizes that this is a business decision for companies of all types and sizes to make, including credit unions. For that reason, the agency will not micromanage auto lending, mortgage lending, or member business lending for climate financial risk. This includes lending to family farms and others in the agricultural sector, as well as businesses tied to the fossil fuel industry.
As a regulator and insurer, the NCUA will continue to work to ensure that the institutions it oversees remain resilient against all material risks, including climate financial risk. As such, the NCUA is studying the risks to collateral, held for security on a loan, exposed to climate-related natural disasters in order to understand the risks associated with an increase in those extreme weather events on the credit union system. In its oversight, the NCUA would evaluate whether credit unions are addressing those risks. By managing the risks on their balance sheets, credit unions will remain viable and support broader U.S. economic growth.
My fellow Board Members and I also agree that if there were to be a change in NCUA policy and supervision related to climate financial risk, that change would have to be agreed upon by Board action, just like any other policy change we make on financial technology, field of membership rules, and mortgage servicing rights.
In conclusion, I encourage all stakeholders to review this draft document and provide us your feedback. It will help the agency to develop a stronger strategic plan.
That concludes my remarks. I now recognize Vice Chairman Hauptman.