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Before the calendar turns and credit unions ring in 2020, here's a look at some of the factors that shaped the last year for the movement.
2019's biggest growth trend
While credit unions continued to merge throughout 2019, the pace of those deals was slower than in recent years. But the year’s biggest growth strategies trend saw credit unions reaching beyond the industry to purchase banks.

At 16 deals, credit unions acquired twice as many banks in 2019 as they did in 2018, hitting an all-time record for the industry. The trend reflects the CUs' growing clout in the financial services arena but also indicates that in the current marketplace credit unions may be able to grow faster and more effectively through acquisitions than traditional organic growth strategies.

The surge in bank deals also brought about increased scrutiny. Not surprisingly, bank trade groups have railed at the trend, claiming tax-exempt credit unions are harming local communities by absorbing tax-paying community banks. Industry trade groups have pushed back against that, and lawmakers and regulators are effectively racing against one another to address the issue. The National Credit Union Administration has promised guidance in the near future to aid credit unions purchasing banks, but Congress has also indicated an interest in the matter. Some observers have suggested lawmakers may not move on the issue anytime soon – in part because of the upcoming election year – but the fact that this has risen to a congressional level has some in the industry concerned.
Federal agencies have until May 10 for a final appeal with the U.S. Supreme Court, but CLO industry observers do not expect the Fed or the SEC to follow through.
The U.S. Supreme Court
The industry’s long-running field-of-membership saga saw decisive action in 2019 but the grand finale may not come until next year.

After having two of the FOM rule’s four provisions invalidated by a court in April 2018, an appeals court in August reversed that decision. The ruling kept in place a provision that would increase population thresholds for rural districts to 1 million consumers and allow combined statistical areas of up to 2.5 million people to automatically qualify as a well-defined local community.

But the appeals court was skeptical of a provision that would allow credit unions to exclude urban cores from their FOMs, which bank groups claimed would allow CUs to engage in redlining. The National Credit Union Administration has attempted to clarify that aspect of the rule, though that has not yet been approved.

Not long after NCUA issued those revisions, the appeals court denied the American Bankers Association’s request for an en banc hearing. That leaves banks two options: accept the status quo or appeal to the U.S. Supreme Court. ABA representatives said they are considering an appeal but the group has not yet definitively moved toward one. The court would be unlikely to consider the matter during its current session, some observers said, meaning it wouldn’t likely take up the case until next fall at the earliest.
Todd Harper, left, and Rodney Hood, nominees to the National Credit Union Administration board, seen here during a Feb. 14, 2019 confirmation hearing before the Senate Banking Committee
New dynamics on the NCUA board
After being shorthanded for nearly three years, the NCUA board returned to full capacity this spring.

President Trump nominated Rodney Hood to the panel in 2018 but a third seat – that of former chairman Debbie Matz, who left in April 2016 – remained open until Todd Harper’s February nomination.

After Senate testimony, the pair were confirmed in March, with Hood subsequently being appointed chairman (a move that demoted Mark McWatters from chairman to board member). It didn’t take long for divisions on the board to reveal themselves.

As the panel’s lone Democrat, Harper is effectively sidelined on many issues, but that hasn’t stopped him from raising objections on some major issues. One of the most significant came during the board’s June meeting with a proposal to further push back implementation of the agency’s risk-based capital rule to 2022. Harper argued that the comparatively small number of institutions subject to the rule have already had adequate time to prepare, and that NCUA could be ignoring more systemic issues such as concentration risk by focusing so heavily on risk-based capital. Hood has promised the agency will use the extension to rework wider capital rules for credit unions. NCUA ultimately approved the delay, and in a recent CU Journal opinion piece Harper said the agency’s inability to move forward sooner may be placing credit unions in harm’s way.

Harper also recently proposed changes that would increase oversight of large, complex credit unions (which he defined as those over $1 billion in assets) with a focus on additional consumer compliance exams similar to what banks face. That proposal, widely panned by the industry, had some support from McWatters but didn’t come to fruition in part because it was attached to the NCUA budget. It remains to be seen how or if Harper will continue to push the topic in 2020.

Despite being back at full strength, there is still uncertainty regarding the board. McWatters’ term expired in August and his successor has not yet been nominated. Board members regularly stay on as lame ducks, though the question remains whether the president will nominate a replacement for McWatters’ seat before Trump’s term ends in January 2021.

Note: This slide was updated with a correction at 11;33 A.M. on Fri. Dec. 27, 2019.
Rachel Pross, chief risk officer at Maps Credit Union in Salem, Ore., testifying before the House Financial Services Committee in a Feb. 13, 2019 hearing on pot banking
Credit unions' #MeToo moment
One of the most controversial moments of the year occurred early in 2019 after Rachel Pross, chief risk officer at Maps Credit Union in Salem, Ore. (pictured above), penned a candid LinkedIn post on gender discrimination and sexual harassment at credit union conferences and across the industry. The post sparked a lengthy debate within the movement and offered credit unions their own #MeToo moment, not least of which because many LinkedIn users publicly replied to Pross’s commentary with their own stories of being harassed.

The credit union industry touts itself as a place where women can succeed at the highest levels, and recent data from the Credit Union National Association backs that up, noting that more than half of the movement’s chief executives are women, compared with only a small percentage of banks and Fortune 500 companies. But the majority of female CEOs run small and mid-size institutions, which are more likely to be merger candidates, and due to their size may not pay as well as larger shops.

Pross published her LinkedIn essay shortly after this year’s CUNA Governmental Affairs Conference in Washington, and while she and other respondents touched on issues in the branch and the corporate office, much of the behavior Pross and others detailed reportedly occurred in a conference environment, either at the show itself or in hotels and restaurants utilized during those events – in other words, places which tend to have a less formal atmosphere than the workplace. But speaking to CU Journal shortly before the industry’s summer gatherings, trade representative officials said they had only made minimal changes to conference policies in the wake of GAC. It remains to be seen if further changes will be put in place for conferences in 2020 and beyond.
CU in Congress
It was an up and down year for credit unions in Congress. The industry’s tax-exempt status didn’t face the same scrutiny in Congress as it did in recent years, and there were several key wins for CUs, including a move late in the year that protected credit unions’ rent-free access to military installations, rather than expanding that privilege to include banks.

There are also signs that the National Credit Union Administration’s decades-long push for third-party vendor oversight may finally be breaking through after discussion draft legislation was released earlier this year that would provide that not only to NCUA but also to the Federal Housing Finance Agency. Opinions vary on whether this would count as a win in Congress, but it at least indicates lawmakers are willing to listen to the federal regulator.

Plenty of other issues of note to credit unions remain stalled. Even after countless discussions between CU leaders and members of Congress, lawmakers are no closer to establishing a national data security standard than they were several years ago. Industry observers suggest that says more about the retail lobby’s power than it does the credit union lobby. Compounding the issue are new laws at the state level – first with legation in California subsequently copied by other states – that expand data protections for consumers and have wide-ranging impact on any organizations doing business in those states. And remarks earlier this month from Sen. Mike Crapo have put a question mark over pot banking after a year in which it seemed banks and credit unions would finally make progress on that front.

NCUA Chairman Rodney Hood also closed out the year in a clash with lawmakers. During recent Senate testimony Hood wanted to keep the focus on agency priorities but found himself having to answer for his political activities. Sen. Sherrod Brown (D-Ohio) grilled Hood on a controversial video the chairman made praising President Trump and incidents in which the pair have met in person and Hood has shared photos of that, with Brown suggesting Hood may have violated the Hatch Act. The matter has not yet been settled, but the pair’s most recent interactions indicate there may be more questions to come.