(Nov. 25, 2020) With changes coming to the membership of the NCUA Board, NASCUS believes now is a good time to consider some changes in how the NCUA Board is constructed – namely, requiring that at least one member of the board have state credit union regulator experience, and increasing the size of the NCUA Board from three to five members.
NASCUS and the state system have long advocated the changes.
“A board member who has served as a state credit union regulator would ensure that the state perspective is considered in the board’s deliberations, establish diversity of voices and better foster a robust dual charter system,” said NASCUS’ Ito. “State-chartered credit unions represent 50% of all credit union assets nationwide. The majority of state-chartered credit unions are federally insured. Without at least one board member with state credit union regulatory experience, NCUA is prone to a federal credit union bias as both the chartering body for federal credit unions and insurer of both federal and state credit unions.”
Increasing the size of the NCUA Board from three to five members would allow for better communications among the members without triggering formal meeting requirements (under the federal open meetings laws), and would raise the quality of debate, exchange of perspectives and transparency of operations, Ito said.
“Governance best practice recognizes that too few directors can pose the risks of less transparency and a concentration of power,” Ito said. “Indeed, NCUA credit union rules require federal credit unions to have at least five board members for these reasons.”
Making the changes won’t be as simple as flicking a switch, Ito noted: Congress will have to amend the Federal Credit Union Act to realize both. “However, the state system believes that, going forward, these changes will benefit the agency and the overall credit union system,” Ito said. “We pledge to work with any and all members of Congress to help them adopt these changes.”