As Prepared for Delivery on January 27, 2022
I’d like to first state that this issue, succession planning, is one where I agree that it is a real problem for some credit unions. Our job is to figure out if further NCUA involvement in this issue is beneficial, and if so, how do we ensure that there’s no burden on credit unions that have done sufficient succession planning.
The Federal Credit Union Act states that the board of directors must oversee the credit union’s operations to ensure the credit union operates in a safe and sound matter. The primary goal of succession planning is for the protection of the member — it all comes back to the member.
Over 30 percent of mergers in smaller credit unions are primarily or secondarily attributable to lack of succession planning. This is significant and troubling.
The cooperative business model, by definition, gives greater choice to the individual member regarding the direction of their credit union. When a member has no option but to vote for a merger because there is no succession plan for the CEO, they have lost that choice and ultimately their native credit union.
That is not to say that a merger isn’t the right choice for some credit unions. But the choice to merge should be deliberate and planned.
You’ve heard me say before that regulators don’t realize how hard their words land on those they regulate. I’ve seen first-hand how a casual comment by an examiner can bring a project to a halt at a credit union — through no fault of the examiner except the examiner didn’t realize the impact.
When I look at this proposed rule — or any rule for that matter — I worry about unnecessary burdens placed on already stressed credit unions. We should not create work for the majority of credit unions in order to address a challenge in a handful of others. We are asking for stakeholder input on the burden of the rule and welcome suggestions for less burdensome alternatives.
Ultimately, a succession plan is one of management’s most important responsibilities. For millions of members, succession planning means greater choice over their financial lives. It all comes back to the member.
Thank you, Mr. Chairman, that concludes my remarks.