McWatters' remarks herald 'a new day at NCUA'

I applaud Credit Union Journal’s thorough and in-depth coverage last week of the (newly named) Inclusiv annual conference. The articles highlighted the many opportunities for growth and impact in financial inclusion and community development lending presented throughout the two days.

I did want to respond to the piece “McWatters to credit unions: Not NCUA’s job to ‘hold your hand’” from last Wednesday to share my own perspective on the chairman’s remarks. I was impressed by National Credit Union Administration Chairman Mark McWatters’ accessibility and candor when addressing thorny topics and his willingness to take questions from the floor. We benefit by hearing what the leaders at NCUA are genuinely thinking rather than from pre-prepared remarks.

I had a different take-away from his response to a credit union organizing group, New Economy CU. The question was how can a newly chartered credit union expect to succeed when they are so often hamstrung for many years to come by very restrictive terms in the initial letters of understanding and agreement? These terms limit the ability of a new credit union to lend (often to less than $5,000) which in turn limits its ability to build a strong and viable business. This unfortunately has been the state of affairs for decades and has caused the anemic performance of so many promising new start-ups.

When the chairman said “it’s really not up to me to hold your hand and make sure that the doors are open,” I interpreted those remarks as a promise for a new approach from the agency when chartering a new credit union. This statement signaled to me that when a talented team with strong leadership and management are able to put together a strong and viable business plan, they ought not to be hampered or hijacked by an overzealous regulator trying to restrict and limit their ability to grow and lead that business.

I see this as an opening for a better business model for newly chartered CUs, one with the ability to have diversified lending with the opportunity to serve multiple needs within their communities while generating sufficient revenue to fuel their growth in a responsible manner. In fact, this and other responses evoked the possibility of a new day at NCUA in which CU leaders are able to lead their institutions, and examiners and auditors are expected to do just that, examine and audit and no longer attempt to impact or unduly influence the business of the credit union.

We look forward to advancing this goal with NCUA and hope to see more robust and lasting institutions to receive charters and continue to reach and serve new and underserved communities.