SAN FRANCISCO – NCUA Chairman Rodney Hood expressed his support for the dual chartering system during remarks here, but also called on state regulators to join him in addressing what he called the “civil rights issue of our generation.”
Separately, NCUA and NASCUS have signed a Document of Cooperation.
Speaking to the NASCUS State System Summit, Hood said he is committed to doing something about financial inclusion. “The lack of access in many communities is a civil rights issue that many of us in this room as regulators can address.”
Hood also told the meeting the “system of regulation and supervision, where federal and state authorities work cooperatively, always with the common goal of a safe, sounder, more efficient and innovative credit union industry, has clearly demonstrated its merits. Essential to making that system work is a solid relationship between the NCUA and state regulators, based on mutual respect.”
Update on MERIT
Hood also offered an update on the progress of the NCUA-State Supervisor Working Group, created in 2017.
“The group is committed to evaluating the examination program for federally insured, state-chartered credit unions and making recommendations for changes,” he said. “I am excited about the possibilities it represents.”
Hood said he expects by Fall of 2020 the agency will begin the roll-out of its new Modern Examination and Risk Identification Tool (MERIT) system.
MERIT is designed to initially replace NCUA’s current exam AIRES (Automated Integrated Regulatory Examination System) platform and will have the capacity for credit unions to securely exchange documents with examiners. One objective is to conduct more exams remotely, which will save expenses related to examiner travel.
The Working Group, comprised of NCUA senior staff and representatives from six state credit union regulators, used ideas gathered from focus groups and other credit union stakeholder outreach to create a work plan in three phases, Hood said.
Those three phases, according to NCUA:
- Phase I, recently completed, developed a pilot program for a system of alternating examinations. Six states are now participating in that program.
- Phase II, now under way, will identify improvements in coordination and cooperation between the NCUA and state regulators when conducting joint exams or supervision.
- Phase III will look for other potential benefits to credit unions from improved collaboration between state and federal regulators.
“What we’re doing is really no more than staying faithful to the fundamental credit union principle of people helping people,” he said, “working together to support one another, to share best ideas, to fulfill needs, to find solutions, to create opportunities, to help credit unions and their members grow, thrive, and prosper.”
Document of Cooperation
Separately, during the meeting NCUA and NASCUSsigned a Document of Cooperation here. The document was signed by Hood and NASCUS Chairman John Kolhoff, the state regulator for Texas.
The document was signed for the stated purposes of “ensuring the safety and soundness of the credit union system, fostering an environment of innovation, prosperity, and success for all system stakeholders, and maintaining a strong cooperative relationship between the state regulatory system and the NCUA.”
NASCUS and NCUA last signed a Document of Cooperation 12 years ago in 2007.
According to NASCUS, the newly signed document is the result of extensive work by the NCUA-State Supervisor Working Group, which has been working on several projects related to shared supervision, as noted above. Representing the state system in this effort included Kolhoff, Steve Pleger from Georgia, Kim Santos from Wisconsin, Katie Averill from Iowa, Dudley Gilbert from Oklahoma, and Anthony Rogers from Tennessee, along with NASCUS CEO Lucy Ito and NASCUS EVP/General Counsel Brian Knight.
Principles of Partnership
“The Document of Cooperation is a recommitment to the principles of partnership and cooperation between NCUA, state credit union regulators and NASCUS,” said Kolhoff. “A strong relationship between state and federal regulatory agencies will both increase the efficiency and effectiveness of the supervisory programs and foster a healthier regulatory environment for credit unions.”
“We appreciate Chairman Hood and NCUA publicly committing to engage with state regulators and NASCUS,” added Ito. “ While the Document of Cooperation recognizes the distinct roles that state regulators and NCUA have in supervising credit unions, it acknowledges, what we at NASCUS have always known – cooperation among state regulators and NCUA is critical to bolster a robust dual charter framework that benefits consumers and the broader credit union system.”