HONOLULU -
Q: What priority has changed for you over the last year?
Hood: The one that hasn't changed is safety and soundness. But the priorities I have taken on over the past year include enterprise risk management and taking a holistic approach that looks beyond balance sheet risk and at those things it takes to remain vibrant. Another place I'm looking and which I think is equally important is making sure we have future leaders for the credit union movement. The statistics are startling that we in financial services could face a shortage of the workers we need. I'm working on an initiative called Blueprint 20/20 that works with colleges and universities to talk about careers in credit unions. I want to create credit unions as viable career choices for credit unions.
Hyland: I agree the first priority of our board is safety and soundness. But also from my perspective of having been in the credit union industry I want to retain the viability of the federal charter. In addition, the other thing I hear all the time is ensuring that NCUA is aligning its practice with its policies. How regulations are implemented in the field so you are seeing a truly risk-focused exam. Making sure you are managing the risk is very, very important.
Q: Last year, BSA and tech issues were major issue for NCUA examiners. What big issues come next?
Hyland: I think most in the audience would say BSA is still a focus of examination. A move is afoot to make sure the regulations we have in place and are enforcing are aligned with the risk an institution is taking. Risk profiles should accommodate the differences in small and larger credit unions. You must also conduct due-diligence on any third-party contract you have to make sure you understand the terms.
Make sure as you engage in third-party contracts that you understand the ramifications and how you get out of the contract if something goes awry. Examiners are focusing here because we've seen some instances where credit unions have been caught between a rock and hard place.
Second is strategic planning; the future is here and now. The CU movement is in your hands and you have to have a path going forward in how you're going to serve your members. The future is out there and you need to think about what that future looks like. Does your board look like your FOM? Does your management? Have you talked to members about what they want? Are you meeting them with where they are in life?
Hood: I couldn't agree more. I think all are critically important. To throw out a few others I would say that succession planning as part of strategic planning is important. Other things are that with the risk-focused exam I don't want there to be a perception that every year there is a different focus from NCUA. I don't want an examination topic du jour. I also agree we want to make sure examiners are aligned with policy. I'd like to see a standardized process that what happens in one area of the country is similar to what is experienced in another part of the country.
One of the things about being in Hawaii is that I've been able to visit with several credit unions. I've visited CUs from one employee to several hundred. One thing they tell me is that our examiners here in Hawaii use a consultative process and ask, 'How do we go about helping you be safe, sound and vibrant and that you have all the resources you need?'
Q: Small CUs seem to be disappearing. What is NCUA's view on this and what can be done?
Hood: I desperately want to get more help from all of you to get solutions that make them more vibrant and can keep them around. We at the agency are marshalling our resources and providing the workshops, technical assistance grants, doing a lot of work with the Federation (CDCUs) and trying to work with partnerships. We recognize in this current environment that the needs of a small credit union are vastly, vastly different from those of a large credit union. We provide grants for small CUs to hire interns and I encourage them to apply. With the Blueprint 20/20 initiative those CUs should be among the first to see if they can get college students to help them.
Small credit unions can best leverage their resources through these partnerships. I want to see small CUs succeed because I think they are the ones that really have the ability to touch the underserved, going against the payday lenders. They in many instances are the initial institutions that many of our underserved populations use.
Q: Rep. Barney Franks supports CRA for CUs. Do you believe these are needed?
Hyland: I've said many times that I don't think CRA is appropriate for CUs. What led to CRA for banks was redlining, and I don't think that's happening in CUs. Having said that, the question of how CUs are doing in serving low-income individuals has been asked and is squarely in the sights of our Membership Task Force, which I chair. How CUs are doing in serving low-income memberships is a tricky question. The question of data collection is an interesting one. And NCUA is still holding town hall meetings on these questions.
Hood: I agree. CRA does not belong in credit union system. I was a CRA officer early in my career working for a very large bank. It was onerous and burdensome to implement. Credit unions, because you display the people-helping-people philosophy, do not need a piece of legislation enacted in 1977 to help you do that. Credit unions are doing the right things already.
Q: NCUA recently amended rules on conversions to mutual savings bank. Do you think the new rules will protect member interests?
Hood: One question I often get is about conversions. It is my hope with the new process we will have the transparency that is needed to have accurate disclosures. I want to make sure members are armed with the information they need to make an informed vote. Credit unions are providing the capital to members. Members need to know that if it does become a mutual savings bank that they are not going to have that same access to capital.
Q: NCUA recently issued a rule to govern member access to books and records. Why?
Hood: It fosters transparency. If you're going to have credit unions as member-owned, democratically run institutions than it's important that the member-owners have access to the information they need. I do recognize that many folks are concerned over where you draw the line. This is primarily about minutes of meetings. No one will have access to confidential information or personnel records. Democracy runs on information. The intention here, however, is not to give information that will be used maliciously. It's about giving members access to their institution.
Q: Currently disputes about bylaws are governed by state corporate law. What effect will incorporating oversight of bylaws into NCUA's enforcement authority have?
Hyland: There was a lot of dialogue prior to approving this rule. I recognize that the agency sees that an improvement to the process can have a boomerang effect on credit unions. That's why there is language in the preamble to the new rule that NCUA will not use this as the issue du jour to come and examine you. This is about fundamental member rights, so it's critical that NCUA be an arbiter of the fundamental issues if they arise, but not get involved in every bylaw issue that might arise between a member and a credit union. The rule limits NCUA's authority and is fairly narrow in scope.
Q: Hostile merger bids present NCUA and CUs with challenges. What is your position?
Hood: First and foremost I don't think the credit union system needs hostile takeovers. In the 18 months I've been on the board I have come to learn to love working with you because of the collegial atmosphere you have. I enjoy these wonderful shared branching networks. There are many things occurring that can only happen in a cooperative credit union system. That's why hostile takeovers don't belong. If there is a perception of fear and lack of trust there goes the ability to have CUSOs, to have shared branches, to help recover after a Hurricane Katrina or Rita. It will have a negative effect. Let's do all we can to make sure it doesn't rear its ugly head again.
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