New NCUA Chair Outlines Priorities

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New NCUA Chairman JoAnn Johnson said she has identified four priorities for the agency and her chairmanship.

Speaking to NACUSO's annual conference here, she said her first priority is to ensure the safety and soundness of credit unions. "I will not waver from that," she declared.

Second, she hopes to pursue a risk-based capital system for credit unions, something that had been championed by her predecessor, Dennis Dollar.

Johnson said her third priority will be to focus on financial education for Americans. "The fastest-growing age group of those declaring bankruptcy is persons 25 and under," she pointed out.

Finally, Johnson said her fourth priority will be succession planning.

Johnson said one-half of all credit union CEOs are scheduled to retire in the next 10 years. "We must continue to recruit good people from the community and train them."

Meanwhile, with the departure of Dollar, the NCUA board is down to two people-Johnson and Deborah Matz-instead of its usual three. Johnson reported that when she was contacted by the White House and informed she was the new chairman, she said the Bush administration told her it is making the naming a third board member "a priority."

Such an appointment would most likely be a recess appointment (an appointment made while Congress is in recess). But such appointments require approval by Congress within one year.

Former NCUA board member Geoff Bacino was a recess appointment by President Clinton and served one year.

"I got the impression the White House will add a third board member sooner rather than later, but I don't know exactly when," said Johnson.

Former Robins FCU CEO Buck Levins is considered to be a leading contender for the NCUA post, as the agency has typically had at least one person with credit union experience on its board.

Johnson said credit unions should be aware the NCUA has revised rules to allow CUs to do more member business lending. She said she felt it was "sad" that for so many years credit unions could help members with their personal finances but could not do business loans.

"Member business lending is not for every credit union, and NCUA is not encouraging every credit union to get into it, but it is encouraging them to investigate if it is right for them," said Johnson.

Member business loans do involve risk, she continued, but "there is a risk in letting an opportunity pass by."

"Small businesses create two out of three new jobs. The new regulations allow CUSOs to do member business loans. This is an opportunity for credit union members to seize their American Dream, and an opportunity for credit unions," she said.

For credit unions not wishing to bring the expertise in house to meet the requirement of two-years experience in business lending, Johnson said the assistance of a CUSO might be the answer.

According to Johnson, NCUA's staff is looking into issues hindering full credit union participation in member business lending. She said some things might be resolved by interpretations, while others might require a rule change.

Including MBL issues, NCUA is reviewing 16 rules for this year. Johnson urged credit union executives to visit NCUA's website (www.ncua.gov) and offer comments.

"Feedback is very important. The best ideas come from the field; from those impacted by the regulations. If comments come in early, they can be incorporated into the rules," she said.

With her new status as chief regulator, Johnson said she and "the regulated" will not always agree on every issue, but she promised all ideas from CUs would receive a fair hearing.

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