Restoring Cooperative Principles At NCUA

At the heart of credit unions is a new organizational model based in cooperative design. It should also be at the core of the regulatory system. A radical overhaul is called for.

In the 90 million member cooperative financial system today, the most urgent imperative is the restoration of Cooperative Principles as the foundation for regulatory oversight.

NCUA’s actions during the financial crisis continue to be costly for credit unions and their members as well as destructive of their contribution to America&’s economic recovery. Moreover, the continuing homogenization and consolidation of national regulatory oversight threatens to further undermine the rationale for a separate NCUA whose practices of late seem merely to clone those of other regulatory overseers.

The key to NCUA’s regaining the confidence of credit unions as well as that of Congress and the Administration is to unshakably hold cooperative principles at the center of its policies. Doing so is not just the legal mandate in the Federal Credit Union Act; cooperative principles also provide a powerful capacity for delivering credit union value enhancements for their member-owners. This innovative capacity to benefit members is the fundamental reason Congress created a separate and independent system of cooperative financial institutions.

The Leadership Role Of The Regulator

Concern with NCUA’s actions is about more than billions of member funds overspent or the possibility of NCUA’s possible submersion into another regulator. It is the leadership gap that those actions have created in the cooperative system.

  • If NCUA is not supporting and leading with cooperative approaches as stated in the Federal Credit Union Act, how will credit unions continue to distinguish their practices from those of other financial institutions?
  • If NCUA is unable to acknowledge cooperative solutions, how can credit unions be expected to support the financial interdependence required to make their unique insurance and liquidity designs successful?
  • If NCUA is not practicing cooperative solutions, why should credit unions implement cooperative approaches in their own business plans?
  • If NCUA is unable to articulate the special national role of member-owned cooperatives, how can credit unions be expected to evolve their cooperative design?
  • If NCUA does not believe in cooperative principles, why is there a need for a separate and unitary cooperative regulatory system?

The Critical Role For Informed Vision

If the cooperative regulator, whether NCUA or state authority, cannot be the example intended of credit union cooperatives, can credit unions fulfill their special role in providing Americans real choices for their financial well-being? If a cooperative regulatory perspective is lacking, might credit unions be just a few years away from becoming indistinguishable from the banking institutions that Congress had intended to reform by example of an independent cooperative system?

The urgency of these questions inspires a Feature Package which addresses the need for A Vision and Framework for a 21st Century Cooperative Regulator.

September 14, 2018

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