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Samantha: Hello, this is Samantha Shares.

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This episode covers  National Credit
Union Administration Chairman Todd

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Harper’s opinion article in C U Times

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The following is an audio version of
that advisory and the press release.

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This podcast is educational
and is not legal advice.

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We are sponsored by Credit Union
Exam Solutions Incorporated, whose

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team has over two hundred and
Forty years of National Credit

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Union  Administration experience.

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We assist our clients with N C
U A so they save time and money.

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If you are worried about a recent,
upcoming or in process N C U A

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examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

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Also check out our other podcast called
With Flying Colors where we provide tips

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on how to achieve success with N C U A.

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And now Chairman Harper’s letter

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Ninety years ago, President Franklin
Delano Roosevelt signed the Federal

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Credit Union Act, establishing the
federal system of credit unions and

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increasing access to affordable financial
products and services for more Americans.

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Since then, the system has evolved
considerably from one in which credit

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unions offered basic savings accounts,
appliance loans, and short-term credit

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to one that provides long-term share
certificates, money market accounts, auto

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loans, mortgages, credit cards, commercial
lending, and private student loans.

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So, as we look ahead to the next
90 years and what the credit union

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system can become, we should mind the
lessons of the immortal lyrics of the

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Carpenters, "We've only just begun."

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Today's credit union system is thriving,
and we at the NCUA need to make it

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even stronger and more resilient.

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With the financial services marketplace
ever evolving, the system must continue

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to innovate and focus on the needs of its
members, especially those of modest means.

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Credit unions also need to
embrace transparency, fairness,

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vigilance, and foresight to remain
successful in the years ahead.

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Transparency

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Transparency is the sunshine that better
protects credit union members and the

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system, feeds efficiency, saves time,
and leads to better decision-making.

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When credit unions and their members
have good data and information, they

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can make better decisions, benchmark,
and set themselves up for success.

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In the spirit of transparency, the
NCUA is developing a proposed rule

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that would require federal credit
unions to publicly disclose information

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about executive compensation.

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All federal credit union member-owners
deserve to know what their credit

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union leadership is paid, just
like what state-chartered credit

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unions provide to their members and
public companies disclose to their

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shareholders about executive pay.

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In addition, the NCUA's recent requirement
that credit unions with more than $1

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billion in assets report income from
overdraft and non-sufficient funds

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fees on their Call Reports provides
transparency into how credit unions

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operate and compare with their peers.

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Transparency is also why the NCUA
advocates for the restoration of

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its third-party vendor authority.

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When the NCUA has greater visibility
into the operations of credit union

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service organizations and third-party
vendors, we can better protect credit

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union members and the system and
save credit unions time and money.

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We can also close a regulatory blind
spot that threatens the nation's

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vital infrastructure, enabling
the agency to find and address

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regulatory and operational harm
before systemic threats evolve.

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After all, the best way to solve
a problem is to keep it from

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happening in the first place.

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Fairness

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Credit unions were created to
provide financial services to

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underserved populations left behind
by mainstream financial institutions.

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If credit unions are to continue to
follow this statutory mission, fairness

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must be their guiding principle.

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That's why the NCUA joined other federal
financial regulators in issuing a final

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rule on quality control standards for
automated valuation models used by

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mortgage originators and secondary
market issuers when valuing homes.

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That final rule mandates that these
tools incorporate fair lending

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principles and adhere to quality
control standards designed to

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comply with nondiscrimination laws.

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Fairness is also why credit unions must
continue to advance diversity, equity,

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inclusion, and accessibility, so all
members have access to safe, fair,

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and affordable financial services.

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This isn't a political proposition;
it's a business imperative.

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Diversity works.

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It improves organizational performance,
results in better products, and

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strengthens the bottom line.

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With their roots in providing affordable
financial services to under-resourced

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communities, credit unions must
stay focused on serving everyone

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regardless of race, ethnicity, gender
identity, orientation, or religion.

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With greater perspectives in the
workplace and in product offerings,

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credit unions can better fulfill
their statutory mission, contribute

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to expanding the middle class,
strengthen our democracy, and create

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a financial system that works for all.

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Vigilance

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In today's complex and quickly changing
economy, credit union executives,

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leaders, and boards must exercise
active, not passive, management.

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Considering the economic, financial,
and technological challenges on the

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horizon, credit unions must remain
vigilant in managing all risks.

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Cybersecurity risk, for
example, is increasing.

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Last November's FedComp outage and
the widely reported ransomware attacks

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on various credit unions this year
are reminders of what's at stake.

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Members have lost access to funds;
faced bounced payment, late-payment,

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and overdraft fees; and had their
credit scores negatively affected.

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Cyberattacks are a matter of when, not
if, and credit unions must be prepared.

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Vigilance also means the responsible
stewardship of financial institutions.

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The failures of Cal State 9 Credit Union
and Western Corporate Federal Credit

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Union demonstrate the unsustainable
costs of incentivizing short-term gain.

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To address this problem, the NCUA
Board approved a proposed joint agency

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rule on incentive-based compensation
that will align executive incentives

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with the long-term stability of the
financial institutions they manage.

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This proposal, required by statute,
will help billion-dollar-plus

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credit unions avoid a repeat of
the financial crisis 15 years ago.

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Foresight

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Finally, foresight is needed to address
the longstanding consolidation trend

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that challenges the credit union system.

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A credit union board's failure
to plan for the transition of its

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management and key decision-makers
comes with high costs, including

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the potential for an unanticipated
merger when key personnel depart,

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especially in smaller credit unions.

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To address this concern, the NCUA
Board recently reproposed a rule that

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would require all federally insured
credit unions to have a tailored

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succession plan — depending on the
credit union's size, complexity, or

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risk of operations — that covers the
board of directors, the supervisory

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committee, and other officials.

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Like cyberattacks, a change in
leadership is a matter of when, not

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if, so credit unions must be prepared.

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Keys to Success

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Transparency.

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Fairness.

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Vigilance.

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Foresight.

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These are the keys for the next 90
years of credit union success, and

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these north stars align with the
seven-generation stewardship principle.

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This widely used management concept,
which traces back to the Iroquois Nation,

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holds that leaders should look ahead
seven generations to determine the impact

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of their choices on their descendants.

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If a choice will lead to positive
outcomes and promotes overall

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well-being over that long term,
then it's an action worth pursuing.

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And, by doing just that — as a
regulator and as an industry — we'll be

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following the advice given to us by the
Carpenters, "So many roads to choose.

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We'll start out walkin' and learn to run.

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And yes, we've [only] just begun."

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This concludes the Chairman
Harper’s opinion letter.

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If your Credit union could use assistance
with your exam, reach out to Mark Treichel

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on LinkedIn, or at mark Treichel dot com.

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This is Samantha Shares and
we Thank you for listening.