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It’s time to reconsider job applicants with criminal records

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Nearly 25 years ago, “Mary” was a drug addict with a criminal record that included larceny and theft. With rehabilitation and treatment, she got clean and built a life for herself. She has run her own business, earned a college degree, and become a mother and grandmother.

Yet her past was an obstacle to working in the financial industry, so when she wanted a job in a credit union, she needed permission from the federal regulator, the National Credit Union Administration.

As the NCUA’s chairman, my primary job is to protect the safety and soundness of the credit union system. But where appropriate, I also want to encourage the entire financial services industry to take reform-minded steps to better meet the needs of the communities in which they serve, so one of my first actions was to approve a waiver to recognize Mary’s success at turning her life around.

Part of our national identity is grounded in the idea that America is a place where people can start anew. Mary’s story is an example of how individuals, their families, their communities, and our society benefit when we practice forgiveness and extend redemption to those who sincerely repent past mistakes. The dividends are both spiritual and tangible.

But too often, hiring practices lack that quality of mercy; otherwise qualified applicants are rejected, based on long-ago convictions for low-level criminal activity.

Policymakers and business leaders have begun rethinking these punitive hiring practices. They are asking, “How we can better respond to the needs of Americans with old criminal records who need a fresh start?” I say it is about time, and the financial services industry should play a leading role in offering second chances.

In the nation’s capital, this line of thinking has substantial bipartisan appeal, judging by support for the First Step Act that President Trump signed into law last year. This comprehensive criminal justice reform law offers an innovative approach in areas like sentencing and rehabilitation to reduce recidivism. Though it only applies to federal offenses, it is a step in the right direction, and I hope that businesses follow Washington’s lead.

In the financial sector, there are particular sensitivities. For instance, it would be difficult to make the case for a job applicant with a past financial crime that would undermine customer trust, like embezzlement, money laundering or identity theft.

However, when considering potential hires, an exemption may be warranted if the applicant poses no risk to the safety and soundness of the financial system.

The NCUA is studying the guidance we provide to credit unions when they consider a job applicant with a checkered past to see if we can make changes. The Federal Credit Union Act bars anyone convicted of a crime “involving dishonesty or breach of trust” from being connected to the operations of an institution we insure in any way.

Certain minor offenses are not included in this prohibition, and people who have more serious convictions can, as in Mary’s case, ask the board’s permission to work in a credit union. That is a lengthy process, so it seems reasonable to see if we can make it easier. We are asking ourselves questions like:

Can we streamline the process and reduce burdens on applicants and financial institutions? Can that streamlining include delegating responsibility for reviewing these requests, instead of requiring a hearing before the entire board? Could the current prohibition be more narrowly defined, without creating risk for financial institutions?

Research shows the magnitude of the challenge and the opportunity.

It is hard to accurately estimate the number, but recent studies tell us about 77 million Americans have some kind of criminal record. A great many are not violent or career criminals, but people who made a mistake early in life who have since paid their debt to society.

These individuals could be a significant potential economic resource, yet they face hiring barriers that leave them unemployed or underemployed. The value of lost output of people with criminal records who have difficulty finding employment has been estimated at between $78 billion and $87 billion. Those numbers represent a significant drain on our economy. Opening a path forward for more of these people will reduce recidivism and poverty while strengthening families and communities.

I have heard it said that forgiveness is less about changing the past than it is about changing the future. Welcoming these individuals back into the mainstream of American life could be a boon for the industry, particularly in today’s tight labor market. The communities we serve will benefit as well, as it will mean new opportunities to those who otherwise might fall through the cracks, setting them on the path toward a stable, productive place in society.

Most of all, it is the right thing to do, and in keeping with Americans' shared values of forgiveness and redemption for those who are truly penitent.

This is an important conversation and a tremendous opportunity for the financial services industry. Washington took a major step in 2018 with the First Step Act. The private sector should look for ways to expand career opportunities for those who have paid their debt. Credit unions, banks and other financial institutions can play a vital role in leading the way forward.

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