By Michael Fryzel
The federal government is said to be like a locomotive: it takes forever for it to start moving but once it has, get out of its way.
The same can be said of NCUA. Many complain that issues can be discussed for years before any action Is taken and that change is almost impossible to achieve.
The recent change in the make-up of the NCUA Board from three members to two seems to indicate that the locomotive has started to move down the track and pick up steam. The announcement of an open budget hearing this fall, along with a fast review of the 12-month exam cycle, has given hope that now that the engine is moving more changes may be on the way.
This new attitude by the NCUA Board to act on issues of importance that are of concern to the credit union industry could signal an approach to take on more significant and bolder challenges.
One issue, which I discussed almost two years ago and I believe is overdue, will greatly enhance the efficiency of NCUA and bring the agency’s operations more in line with the shape of the industry today.
NCUA currently operates with five regions. The last time there was a consolidation of regions was in 2004 when it went from the current six to five. When that took place on Jan. 1, 2004, there were 9,639 federally insured credit unions. On Dec. 31, 2015, that number stood at 6,021, a significant decrease in credit unions across the country.
It is only fair to point out that during the same period credit union assets increased from $610 billion to $1.2 trillion; membership from 82.4 million to almost 103 million, and deposits from $528 billion to $960 billion. All of these significant numbers for the remaining credit unions across the country indicate that although they have declined in numbers, the size and complexity of those that remain grew significantly.
A Bold Step
NCUA prides itself on consistently reviewing its personnel needs and bringing in fresh eyes to improve its operations. It is a best practice for every federal agency to step back and look at itself to see how it can do a better job.
The NCUA Board continually reviews its regulations and looks for ways to revise and change them to allow credit unions greater flexibility to meet the needs of members in a volatile economy. Changes or clarification in examination procedures are ways to provide an environment for credit unions to grow and prosper.
In addition to those types of changes, NCUA must look to the future and further down the track to take bold steps. One such step would be to begin the process of reviewing if the number of regions should be reduced by one.
Being realistic and keeping in mind that a reduction of one region will see some reduction in costs, one must acknowledge that a reduction in personnel resulting from such a move most likely will come from attrition. In considering any changes the board must maintain a safe and sound credit union system and a strong insurance fund. They cannot in any way weaken their ability to regulate and maintain those goals. They must, however, acknowledge, that it is necessary to shift, retrain and continue to educate their staff and place them where and when needed.
Make 2018 The Goal
So while it may be the right time to consider a reduction in regions, it must be done in the proper manner to fully maintain the integrity of the agency.
When such a major project is undertaken, it takes an enormous amount of time, effort and dedication to accomplish. Workloads between the regions must be balanced, locations of regional offices must be determined, the states within each region must be identified and NCUA must work closely with their union representatives to obtain their input and assistance. Those are just some of the considerations.
A project of this magnitude does not happen overnight. If begun now, a realignment and reduction could at the earliest be implemented by Jan. 1, 2018.
The new Chairman has indicated that NCUA will try to do better, correct mistakes they make, be as transparent as a regulator can be, work with the industry to enable their continued success and be as progressive and forward looking as possible.
The NCUA locomotive is moving and going in the right direction. Now is the time for it to pick up speed and cover as much track as possible.
Michael Fryzel is the former chairman of NCUA and NCUA board member who is now in private practice in Chicago. Mr. Fryzel can be reached at meflaw@aol.com.