The National Credit Union Administration is seeking new ways to support minority credit unions for the vital role they play in providing affordable financial services in underserved communities, NCUA Board Chairman J. Mark McWatters said last week.
McWatters said the NCUA Board is considering ways to modernize the regulatory structure to give credit unions the flexibility to compete. He added that proposed rules on alternative capital and additional payday alternative loan options are two examples of the regulatory changes being considered that could assist minority credit unions.
“Unfortunately, minority credit unions are too often the only federally insured financial institution available in rural and urban communities that have been historically unserved by traditional financial institutions,” McWatters told attendees at the African-American Credit Union Coalition’s Annual Meeting in Atlanta on Aug. 9. “Their presence in these communities provides an alternative to actors that engage in unfair practices at the expense of consumers. It’s that commitment to serve that makes minority credit unions the embodiment of the credit union philosophy of people helping people.”
Minority credit unions make up about 10 percent of all credit unions. Specifically, there are 564 credit unions classified as minority depository institutions. These credit unions have roughly 4.3 million members and $42 billion in assets.
Minority credit unions face several challenges, including competitive pressure from alternative financial service providers, the lack of adequate resources, higher delinquency rates, and the inability to take advantage of economies of scale. NCUA has resources in its Office of Credit Union Resources and Expansion to help minority credit unions meet these challenges.
“The NCUA has a statutory obligation to preserve minority depository institutions and encourage the creation of new ones, and it is one that we take seriously,” McWatters said. “The agency is exploring additional ways it can provide minority credit unions with support through training, grants and other initiatives. Recent regulatory changes like those to our field-of-membership rules will also provide these credit unions with new and better opportunities for growth.”
McWatters also stressed the importance of women and minorities serving on credit union boards.
“The demographics of the country and credit union members are changing. For credit unions to remain in touch with their members and true to their mission of service, greater representation of women and minorities is essential,” McWatters said. “I encourage the credit union community to address this issue aggressively and to look for ways to invite more women and minorities into the boardroom and positions of leadership. It is the right thing to do, and it is long overdue.”