What Is 'Modest Means?' NCUA Searching For Answer

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Even as NCUA is finishing up its pilot data collection on serving members of "modest means," members of the NCUA Board conceded they are still struggling with a definition of that term.

NCUA Board member Gigi Hyland, a long-time credit union operative, said during NAFCU's annual convention she still does not have a clear definition of the term, even as Congress and the bankers continue to hold credit unions' feet to the fire in serving "members of modest means."

Among the questions NCUA executives are still grappling with as they finish the data collection program are: should NCUA define modest means, will serving members of modest means be a defined requirement for credit unions and how do you deal with credit union diversity in defining modest means, said Hyland during a discussion with fellow NCUA Board member Rodney Hood at the NAFCU convention.

These are some of the questions NCUA is wrestling with as it summarizes data collected from 481 credit unions over the last three months and prepares a report to Congress, said Hyland.

No Need For CRA

Hood said even before the project is completed he is convinced credit unions do not need to be forced, such as through a Community Reinvestment Act requirement, into serving members of modest means. "I do not advocate any CRA legislation," said the NCUA Board member. "Credit unions do not need to be prodded into doing the right thing."

Hood also assured the credit unions that were examined under the pilot program that their information will remain confidential and will not be subject to public disclosure under the Freedom of Information Act.

Despite the swirling vitriol between NCUA and thrift regulators over conversions of credit unions, Hood insisted that NCUA work closely with the various banking regulators. He cited several ways in which he has expanded his cooperation with banking regulators, including his service on the board of the government-sponsored NeighborWorks program, along with representatives from the FDIC, the Fed and Office of Thrift Supervision. Opportunities like these, said Hood, allow him and the banking regulators to share important information on regulatory and legislative trends and to compare notes. "There's a lot that we're doing to further the relationships with other regulators and I hope we can do more," he added.

One thing Hood has learned from that interaction, is that NCUA tends to cooperate more with credit unions in a variety of ways, than the other regulators do with their regulated entities. He cited the emergency relief after Hurricane Katrina, as a prime example, and said the sharing of information between credit unions and their regulator was vital in that disaster.

Hyland said this approach was clearly evident during the process of collecting data on the Bank Secrecy Act. NCUA examiners were deferential during the process, acknowledging that credit unions know their members best and knew what the examiners needed to be looking for, she said, calling it a "collaboration between you and the examiners."

What About Disappearing CUs?

The collaborative approach, suggested Hood is necessary when discussing the controversy over credit unions to mutual savings banks. "There's not one person or party that is responsible," he insisted, "but all of the stakeholders."

That includes members, directors and management. All, said Hood, should be afforded participation in the major decision to change charters to a bank.

Hyland expressed concern over the dwindling number of credit unions, especially the smaller ones. She said about 300 credit unions are eliminated each year, through mergers or liquidations and said NCUA is continuing to search for its proper role.

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