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Brian Knight CEO Of NASCUS: With Flying Colors


WFC 57 | NASCUS

NASCUS, the National Association of State Credit Union Supervisors, is the body that advocates for a strong and healthy state credit union system. Its members include state regulatory agencies, credit unions, credit union leagues, and organizations that support the state credit union system. The NASCUS mission is to enhance state credit union supervision and advocate for a safe and sound credit union system.


In this episode, I talk to NASCUS's CEO, Brian Knight. We discuss:

  • NASCUS structure and membership,

  • NASCUS Training Offerings,

  • What might be coming in 2023 on the State and Federal Legislative Front,

  • Trends in Credit Unions,

  • And Much More.

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Listen to the podcast here



Brian Knight CEO Of NASCUS

I'm excited that I've got Brian Knight, the CEO and President of the National Association of State Credit Union Supervisors, or what I've called NASCUS. Brian, how are you doing?


I'm doing well, Mark. Thanks for having me. How are you?


I'm doing great. Brian, I've known you for quite some time, and many of my readers probably know what it is you do. When I first started working with you when you were at NASCUS and I was at NCUA, I believe your title was General Counsel of NASCUS, but since then, you've been promoted to run the organization. If you could, give a little bit of your background at NASCUS so that they're aware of all the different things you bring to the table for this interview.


Thanks, Mark. We have known each other for a long time I hope for the better. I'm at NASCUS. I joined NASCUS in 1998 to oversee NASCUS's legislative and regulatory affairs in that capacity. I did all of the regulatory and statutory analyses. I wrote the comment letters. I was the subject matter specialist talking out in the credit union system to both our state regulatory agency members and credit union stakeholder members on what was coming out of Washington and the different states. From there, I became the Executive Vice President and General Counsel, still with the responsibility of overseeing all of that. I held that role until January 1st of 2022,when I became the President and CEO.


You're coming up on the anniversary. That's exciting. My interaction mostly with NASCUS was that we would have 1, 2, or 3 big meetings where we would pull the state regulators in with NCUA and talk about what topics are hot and what new regulations might be coming out. We would get into breakout sessions and talk about different things and about how we might be able to improve regulations. Some good ideas were born in those sessions, but there's much more to NASCUS. If you could describe what NASCUS is and what it does for its members, that would be great.


I'm fully aware that for some, NASCUS is a little puzzling because, as I alluded to, we have both regulator members and credit union systems stakeholder members. Maybe it's helpful to start in the beginning. NASCUS was created in 1965 by state regulatory agencies. In the '60s, there was this explosive growth of state-chartered credit unions. While they had been around since 1909, they were increasing in number.


In 1965, about 28 state regulatory agencies and, interestingly enough, a Canadian province all came together and said, "The number of these institutions is increasing. We're wrapping our arms on how to supervise them distinct from our banking responsibilities. Maybe it would be helpful if we all came together." Twenty-eight of them came together and formed NASCUS. Within a few years, all of the states with state-chartered credit unions had joined NASCUS.


We were, until the late '80s, an organization focused on helping the state regulatory agencies share best practices, consult with each other about emerging risks, and ensure that there was a viable, safe, and sound state credit union system. To their credit, in the late '80s, the regulatory agencies began to discuss inviting system stakeholders into the organization.


The reason that they began those conversations internally is as they looked out on the system, to their credit, they had the self-awareness to say, "We're viewing the world through a supervisory lens, but we fully appreciate that we might have blind spots and things that we think are a supervisory answer to a problem that we see. That might not be working the way we think it will once it gets out into the wild."

In the late '80s, they started by inviting credit union leagues into the organization. In 1992, they invited credit unions themselves in to have the conversations and share everybody's expertise, "Here are the risks and challenges we are seeing. What are the answers that satisfy regulatory and supervisory concerns but also provide a viable operating environment so that our state-chartered credit unions can be healthy?"


That's where we are now. At our core, we are still professional regulators in association with the 45 states or state-chartered credit unions. There are five states that do not have state-chartered credit unions. We have two states with state credit union acts but no state charters, Arkansas and Hawaii. Their last state charters converted to federal in the late '90s or early 2000s. Wyoming, South Dakota, and Delaware have never had a provision for state-chartered credit unions. They only have federal credit unions in those states. We have 45 states with state charters. We have state-chartered credit unions. We have other system stakeholders or leagues. We have federal credit unions that belong to NASCUS. We have other third parties.


What we serve as is that collaborative center where everybody can share their perspectives of the challenges ahead, talk about what the solutions are, and then through that mechanism, come out with what we hope is the best public policy supervisory approach to advance a healthy, safe, and sound state credit union system. We still do the regulatory advocacy. You had to read all the comment letters I wrote back in the day. We still do that regulatory accuracy before NCUA and all other federal policymakers, whether agencies or Capitol Hill. We help state regulators as they look at modernizing their state acts, regulations, training, and best practices.


NASCUS serves as the collaborative center where everybody can share their perspectives, solutions, and mechanisms to develop the best public policy supervisory approach.

We help our state credit union members look at modernizing their state acts on some of the trends, best practices, and best provisions we see around the country. We do a lot of professional development, both for the regulators and industry. Some are just for the industry around the country. We are the sole organization with a singular focus on the future of the state system, but with that comes our dedication to a properly balanced dual chartering system.


We do support our federal friends as well. Particularly, for example, in 1998, when there was all of the work that led to the Credit Union Membership Access Act, which wasn't a fix that the state system needed, but we recognized that it was a fix that the federal system needed. NASCUS and its members put their weight behind that. Even though it didn't give state charters new powers, it gave them limitations, but it was essential for a healthy dual chartering system.


That's a great example of the teamwork that you can have to keep the dual chartering system viable. To me, life is all about having options. In those 45 or 46 states that give people a choice, it's great to have the option of being a federal charter or a state charter because, based on people's business models and their future plans, one system might be a little bit better than the other for different reasons. The other thing is having the leagues as members and having credit unions as members. You reminded me of one of my favorite books, which is called The Wisdom of Crowds.



If you don't seek the opinion of the crowd, you can end up making decisions that seem brilliant, but when it goes live, it's more of a led zeppelin. It hits the ground and crashes. By having all those different types of members, you have the ability to pick their brains and still remain focused on the tenets of what NASCUS is all about and what the state regulator system is all about, but you can take all of that into consideration. I'm aware of the board that consists of the state regulator side. They work somehow with an advisory board of either the credit unions or the leagues.


We have two leadership bodies. We have a regulator board and what we call the Credit Union Advisory Council. The Credit Union Advisory Council is made up of our credit union members. They represent the system stakeholder side of our membership, whether it be state-chartered credit unions, federal credit union leagues, or the other third parties that belong.


Our two leadership bodies always meet together. We have four more as needed of what we call joint leadership meetings a year. It is always both bodies meeting together, addressing and discussing the challenges, setting the policies for NASCUS and the direction of NASCUS, debating and evaluating the strength of the state charter and the future of the system, and sharing that stakeholder operational expertise from the credit union CEOs who are there with our regulator board members who are there.


Those two leadership bodies are co-leadership bodies. I answer to two chairs, a regulator chair and a Credit Union Advisory Council chair. While the bodies are unique, the Credit Union Advisory Council is elected by our stakeholder members, and the regulator board is elected by our regulatory agencies. They always meet together.


Going back to my days at NCUA when I was the Executive Director, I was glad I only had one board chairman to report to.


That's an interesting part because some people find that a little bit of an odd structure, but I'll point to people that one of the trends we have seen and are seeing at the federal level is for federal agencies to have advisory boards. They have the CFPB and the Federal Reserve. NCUA has talked about the wisdom of if they should do that as well. The idea of a regulator and regulated talking together is not new.


We have incorporated and built ourselves since the early '90s around that, but it is not something that doesn't exist out there. We have homogenized it into our core operations. We do, to your point on the crowd source, think that it results in better policies both ways. In my years here, I have seen as many times as regulators have listened to the credit unions and said, "We hadn't considered that. Maybe we should reevaluate how we, from a supervisory perspective, view things."

WFC 57 | NASCUS
NASCUS: The idea of the regulator and regulated talking together is not new. NASCUS simply homogenized it into their core operations as opposed to a truly just-outside distant body.

I've seen it equally happen on the other side, where they listened to the regulators and said, "We hadn't considered that perspective." Our view on the wisdom of propriety that we were viewing solely through the lens of our institution and ourselves juxtaposed against the bigger, not just the credit union system but the financial services sector. I've seen those views shape and change based on the input from the regulators. I do think it benefits both sides.


NCUA has talked about having an advisory council. At different times, what happens is a new NCUA board member comes in and gets suggested either by credit unions or the trade that it might be considered. I will predict that someday it will happen. There are different reasons that it hasn't happened at this juncture, other than the cost and the infrastructure of getting it up and things like that, which are some of them, but it has never made it to the finish line.


I predict that sometime while you and I are still involved in credit unions, that will happen. When that happens maybe NCUA will be reaching out to you to see what lessons learned that you have relative to setting it up. Maybe we will mark this note in the show, pull it out and pluck it when that happens for NCUA, and republish it.


One of the things you mentioned is professional development.

I was refreshing my familiarity with your webpage. You've got tons of different training classes. It looks like you have training classes that are modules that people can sign up for and learn different things like sitting at the computer, but you also have sessions around the country where credit unions and/or state regulators can come to get educated.


Trying to stay one step ahead of the curve on all these things is a challenge for credit unions. You help them do that with this training. Walk us through maybe some of what's coming up in 2023, maybe which of the training classes that you've put on in the past have been the most popular as far as attendance, and then any advice for someone who's not a member who might want to sign up to do some of that.


Thanks for that opportunity. There are a lot of different training options. If you take a look atNASCUS.org, we do a lot. You mentioned the web-based. I'll work our way up. The way we view it internally is we do have web-based training opportunities. By that, I don't mean a webinar or podcast as excellent as this, but for our credit union members, we do have a contract with a third party or a content provider that gives our credit union members access to about 900 online courses. We call it Credit Union Campus 365.


Our members notify us that they want to sign up for it as many of their staff as they would like to. NASCUS covers the cost of the licensing for them to participate in this course provision. After we get them registered and handle the administrative aspect of it, they have free reign over 900 courses as many of their staff as many times as they want to take whatever interests them. We have a separate content provider that does the same thing for our state agencies. It's a different provider and a different course content.


We have about 500 courses that are available to all of the state agencies for their examiners. We cover the cost of that. They sign up their examiners. Their examiners can go through about 500 courses. A lot of our states have taken the course offerings and built their class curriculums that they send their examiners through. All of the states can see some of the other states' curriculum setups, borrow from that, and get ideas. They can also ask us for help setting up what might be appropriate for a 1-year, 3-year, 5-year, a fully seasoned examiner, or what have you.


Those are distinct and separate platforms but benefit both the stakeholder side of our membership and the regulator side of the membership. Moving beyond that to specifically curated by us professional development opportunities, we do have web-based opportunities as well the video webinars that we all got accustomed to during COVID. On December 5th, 2022, for example, we had a free offering for all of our members.


There's a law firm talking about the Fifth Circuit Court of Appeals' decision on the CFPB. That grabbed a lot of headlines, "The CFPB funding is unconstitutional." We had this law firm that specialized in this come to talk to us about what was at issue in that case. What did that mean? What are the implications for other agencies that don't go through the appropriations process, perhaps like one that you used to work for?


We did that because I saw a lot of writing about that as I looked at that opinion that I thought was making a whole lot more out of that opinion than was there. That was an example of a live opportunity we offered out to all of our members free of charge. We also have paid curated things. We have done a series of CECL events. During COVID, we were having opportunities where we had law firms coming in from the HR perspective as we were all struggling, "What do we do with COVID? What are our policies? What are we allowed to ask our employees? What's not allowed to ask? What's the liability if we mandate vaccinations or don't mandate vaccinations and all of those issues?"


We have those subject matter virtual presentations available. We also have a wide offering of in-person events. Those in-person events fall into a couple of categories. We will have what I call our state-specific. In some cases, we partner either with a league or a state regulator. In a specific state, we're offering Directors' Colleges, industry days, executive forums, and focused training for the state and federal credit unions in that state. We do those all over the country, multiple ones a year.


We have our nationally drawn signature events. NASCUS was one of the first in the credit union system to do a nationwide cybersecurity conference starting in 2014. We collaborate with CUNA on that one. In collaboration with CUNA back in 2005, and I know you came and spoke at this back in your time at NCUA, we had the largest credit union-specific BSA/AML Anti-Financial Crimes Conference, which we still do every year in collaboration with CUNA.


In 2019, we began a cannabis banking conference to look at all the policy issues around cannabis banking. Hemp banking at the time also was a big issue, but we had been involved in those issues back to Colorado's legalization and Washington's legalization. We were getting so many policy questions around it. We launched that, and we still do that to this day. Our big flagship event open to all industries is our annual meeting or our State System Summit, which in 2023, from August 25 through 29, will be in Nashville. I encourage everyone to take a look at it. It's a fantastic event.


It's three days of networking and focused discussion of the biggest challenges ahead. Those are the ones that would probably be of interest to your stakeholders and readers. We do a couple of regulator-only events. One of the big signature events that you're aware of is what we call our National Meeting. It usually takes place in spring when we will bring all of the state regulators and invite our friends from NCUA. We used to do that conference together. We now run it, but we still invite NCUA. All the state regulators will come together for three days with the stakeholders and talk about the issues confronting them as a state agency. We have other opportunities for the state regulators to come together and talk.


To your point, we do a lot of these different events around the country. There are lots of ways to participate. An overwhelming majority of all of the events that we do are open to the industry except for that National Meeting. Nonmembers are welcome to attend as well. They are geared and designed for our members, but we do have federal members as well. Nonmembers are always welcome to attend so they can take a look. Hopefully, they will see some value in it. We do have 2,400 people a year coming through our various training and professional developments.


That's fantastic. Now in 2023, maybe some of these are hot topics, but FinTech and blockchain are one thing you see. There's the whole crypto side of blockchain, but there's the blockchain infrastructure that credit unions are very interested in. Is there any training coming up where those types of hot topics will be discussed?


When we do our instate training like those Directors' Colleges, those are the kinds of topics that are often on there. They're the big cutting-edge topics. As you probably recall, NASCUS was looking at virtual currencies before Bitcoin and crypto were invented from a BSA perspective. We have been looking at that for a while. You can see things and discussions of decentralized finance, blockchain, FinTech, and crypto at all of those events.


In April 2023, we might do a one-day FinTech symposium where we're going to focus specifically on some of these issues. NASCUS has been talking with states on the FinTech side and encouraging states to consider allowing credit unions to hold equity investments and non-CUSOs in FinTech companies because of the need to get in on that first floor of innovation. You can see a lot of discussion on FinTech, DeFi, and crypto. I anticipate it will be at our annual meeting.


A lot of your readers have probably heard of the crypto speaker in the credit union space, Lamont Black. He has done quite a few things for our members. We have been working with Lamont since 2020 on these issues. As you look at these offerings that come to your or your neighboring state and certainly our national signature meetings, take a look because those hot topics will always be there.


Crypto is a big issue in the BSA space. We have been talking about it. Our interest in that started with virtual currencies from an anti-money laundering perspective. We're looking at it on the cybersecurity side. In our cybersecurity conference, you will get a taste of it as well, and then certainly at our annual meeting or what we call our State System Summit in August 2023 in Nashville.


You could spend your whole time almost getting educated by NASCUS. You've got such an encyclopedia and collection there. That's fantastic. It was great to point out that nonmembers can come, participate, see what's going on, and then find out that it's time to become a member. That's very good. You talked about one of the things that we would do at those regulatory roundups. When you were the NCUA General Counsel, you would talk through what was going on at NCUA. For the reader, are there any takeaways or things they should be thinking about either from the federal or state perspective legislatively on the horizon that's top of mind?


We had a session for a small group of credit unions and some select regulators looking at the outcome of the midterm elections. There are a couple of issues to be looked at. There is ongoing watch over the SAFE Act and SAFE Plus. Will there be some form of a safe harbor for legitimate state-licensed cannabis businesses? That's a big one to look at. I cannot imagine that the fallout from FTX is going to go unanswered from Congress.


There are a lot of questions about that. How do you regulate that? Who should regulate it? With respect to cryptocurrency and FTX, I still think there's a lot to learn about what happened there. I'm not so sure that this is a cryptocurrency collapse and maybe less a corporate structure issue. We will learn more, but in a lot of ways, that will be neither here nor there.


This was a big shocking development that will get a legislative response. I can anticipate, with Republican control of the house, a lot of investigations or hearings, at least into various federal agencies and perceived overreach of agency action rule-making. I would expect to see a pull and tug on issues around ESG and things of that nature. While it's less likely to happen, I still think there are discussions going on around interchange, overdraft protection fees, and those issues.


Laying beneath all of this is what has been, for a while now, the number one concern. That's cybersecurity. It still opens questions on privacy and cybersecurity. Should there be an expanded GLBA? Should there be a state approach to it? All of those issues are going to be in play. On the webinar with our folks talking to us about the midterms, it seems to me that, at least for the next year and a half, everybody is going to be auditioning for the presidential season. I'm not sure how much is going to get done, but I do think that there are some important issues to watch coming out of Congress. At the regulatory level, there are some things to be watching.


NCUA has taken a generally measured approach to rule-making. Certainly, it seems there's less coming out than there was maybe even a few years ago in terms of volume but what is coming out is very impactful. We are trying to properly calibrate subordinated debt and those issues, but back to where we started this conversation in terms of the dual charting system, NCUA has taken what I consider some positive steps for the federal charter in terms of field of membership. I'm not sure they are done examining where they have the regulatory flexibility to do things.


They're constrained by their statute, as are their states. What NCUA has done in the field of membership has been great for federals. It has put some pressure back on the state system. That's the beauty of dual chartering, but as a result, I also know that our system stakeholders and some of our state regulatory agencies in '23 are going to be looking at their statutes. Are we keeping pace with NCUA? Even in their view of it, are we positioning our state charters to be able to fully participate in what is a time, in my view of transformational change in the broader financial services sector?


What are some of those other powers and authorities, whether it is an equity investment in FinTechs, the field of membership, or other structural authority power changes? I do think we will see an active regulatory year in 2023. There will be a lot of push and shove during the legislative year. I'm not certain as you and I sit here what is going to move beyond that push and pull in the legislative context, given the dynamics of how we will be entering the 2024 presidential season.

WFC 57 | NASCUS
NASCUS: Expect an active regulatory year in 2023. There could be a lot of push and shove during the legislative year, given the dynamics of the approaching 2024 Presidential Season.

I wrote down a few things that you touched on there. I've heard that, potentially, NCUA wants to do a little bit more on the field membership side. One of the challenges they have is what the act allows and how close to the edge we have come. Do we want to cross over that ledge? Do we want to be sued by the ABA? They're going to sue regardless and in the end, whether the Federal Credit Union Act does not allow it will drive NCUA. They're not going to give an inch. There are all those things NCUA has to think about.


Our state regulatory agencies have to think about those things as well. As a regulatory agency, state or federal, you are constrained by your statute. Public policymakers in the legislative and executive branches set the guardrails. You can operate within there, but I'll also point this out. You know this from your time at NCUA. The other thing that sometimes needs to be better appreciated in the broader system is on some of these issues, we do not have a unanimous view within our credit union family as to where those boundaries should lead.


You know this. For every credit union that wants broader commercial lending, a broader field of membership, or whatever it is compensated, there's a core that says, "Not that." We also need to figure out as a system what the majority sentiment is as to where we should go. That's a pressure on our state regulatory agencies on NCUA that sometimes don't fully appreciate that. After the advocate leaves the room, there come credit union people who are like, "No."


It's a lot of herding cats on each side. Ultimately, we talk about FinTech and all the things that you can do on your laptop and your phone. For all practical purposes, my phone is my credit union branch. It's my bank branch, but that's not consistent with how the act reads, but ultimately, at some juncture, there's a fork in the road. Will that be allowed? If that's allowed, what does that mean beyond that? You're going to get the ABA pushing. Should a credit union be taxed if it goes down that route and all those things? At some juncture, maybe after 5, 10, 15, or 20 years from now, that's going to have to be wrestled with.


Regarding FTX, I didn't buy much on Black Friday, but I almost bought my first ugly Christmas sweater. It said, "FTX risk management team 2022." I have to picture that. I've got a blog I'm going to do about it. There have been a lot of writings about that. Overregulation is not a good thing, but some regulation is a good thing.


Whenever the dust settles in Washington on who the president is in the next go-round, it might even take that long, but because FTX and these other things happened, which seem to be tied to leveraging balance sheets allegedly, some other things, and some lack of corporate governance, that's going to get people thinking about the blockchain side of things, what makes sense, and what doesn't make sense.


There's a quote: ""I don't understand it, and I don't understand the people who understand it. When you start reading some of these things, the hair on the back of your neck goes up as a former regulator, knowing that there should have been some systems in place in many of these places and that there are risks that were being taken with other people's money. I'm curious to see how that plays out.


Regarding the SAFE Act, hopefully, and eventually, there's a politician on the West Coast I heard on a podcast who's retiring in 2022. He's one of the architects of that.



It's Ed Perlmutter.


Listening to him was fascinating. All he has done is to try and move this forward. Hopefully, there's something that comes of it because of the safety of the cash issue and all that. The federal government has got to catch up with the states so that can be done in more of a safe and sound way.


That's a lot. We're shifting gears. Is there anything you're hearing relative to trends in credit unions that are of concern or that credit unions have their eye on? NCUA has got its priority letters, which cover a lot of things. I've heard some things from my clients, but I'm curious about what you may have heard from where you sit.


In terms of concerns about credit unions, it's not so many concerns about credit union activities, specifically themselves. I put the more the systemic risks and challenges. It's first and foremost figuring out where we are going to land in '23 between inflation and recession. How do you balance the continued rate hikes? Is there going to be a downturn? Most certainly, there is, but what does it look like? Is that going to be a traditional downturn? Is there going to be something more extreme?


At a macro level, you have those. I'm hearing a lot of concerns both from the stakeholder side and the regulator side on liquidity tied to that. Cybersecurity and liquidity are going to be the two big ones there. A digital transformation isn't so much a regulator concern. I hear this from our credit union stakeholders. It's the expense and complication of the digital stack transformation going on inside credit unions and the modernization of cores. You alluded to the products and service platforms that the consumer is expecting.


What does that look like? How do you balance providing that with funding all of the compliance and everything else that you have to do? At the same time, you have an eroding around the perimeter and some of the fee income that supports that. Where is the public policy going to land? It's something that we all generally could look at and say, "That is probably a little bit of abusive fee income versus what are very legitimate discussions. You're not supposed to be necessarily overdrawing your account. What about the members who don't do this? Who should pay for these issues?"


There's a lot of concern there and the transformation of the financial services space. From a regulatory side, are we properly calibrating what is expected of the regulatory agencies, which is a safe and sound system? Everyone complains about the regulator until something goes horribly wrong. You have heard this, I'm sure, at NCUA. Our states have heard it. When it does go wrong, the very first thing you hear is, "Where was the regulator?"


"Where were you?"


You have what is expected by everybody in the system, the consumers, the policymakers, and the credit unions themselves, a safe and sound system properly calibrated. We need to allow the system to continue to evolve along with all of the other financial services marketplace. Are we ensuring that we are either proactively equipping the credit union system with the tools that it needs to be relevant or at least staying out of the way so that they can equip themselves? Where is that calibration line?


That's not anything a regulatory agency reaches. We've got it perfectly calibrated. We can now kick our heels back. That is a constant calibration that needs to take place. Against the broader changes we're seeing with DeFi and the non-depository financial services providers, where is all of that going? What are the proper policy lines and safety and soundness lines? It's going to be taking up a lot of energy in 2023.


That's well said. I can reiterate the liquidity side of things, the cybersecurity side of things, the non-bank financials, and how all the FinTech that everybody wants to do interfaces with credit unions. That's a big topic. One of the things I talk about a lot is NCUA's exam priority letter. Two of the priorities you touched on are share overdrafts and taking a look at that and the fees tied to that.


NCUA indicted they were studying that and that they weren't going to do Documented of Resolutions relative to it, but they were studying what communications credit unions had with their members and what audits credit unions have done internally about how that was handled. Whatever they find from that study might lead to some further thoughts from NCUA in 2023. I'm interested to see what they might do there.


One of the other priorities linked to something you said is electronic payment systems. It was one of NCUA's new priorities that had never hit the list before. In this area NCUA "doesn't know what it doesn't know." It's a situation of everything is intertwining and getting more complicated. What risks might that create for cyber, theft, and things we haven't even thought of yet?


NCUA has added regional electronic payment systems, folks, and specialists. They may have selected some of those, but NCUA is putting some investments in there so that they can do their best to meet their mission of keeping things safe and sound. You don't want super long exams. It's not in my backyard, but when something goes wrong, everybody is quick to say, "How in the world did NCUA miss this fraud of X?" It's a true balancing act.


All of those issues are the same thing. The state regulators are looking at that as well. Another conversation we have been having a lot internally at NASCUS among our state regulators and our stakeholders is also looking out over the overwhelming majority of credit unions that are under $100 million. We see the assets continuing to consolidate and credit unions growing at $500 million or above. That number keeps going up. Their sophistication is going up.


To NCUA's credit, NCUA has chartered its fourth new credit union in 2022. That's reversing a trend. We weren't seeing new charters, but we're still seeing a consolidation of about $150 million. I'm not saying consolidation is inherently bad. There are very positive reasons and things that can come out of consolidation. Many of our regulatory agencies and stakeholders of all sizes look out over the credit union system and spend a lot of time thinking about the long-term implications of this continued consolidation.


Consolidation is not inherently bad. There are positive reasons that come out of it. Still, many regulatory agencies look out over the credit union system and spend a lot of time thinking about its long-term implications.

Let's leave aside what I will call healthy consolidation. Two credit unions are like, "If we merge together efficient economies of scale those things as opposed to what has some of our members concerned and regulators concerned, and that is an otherwise healthy modestly sized credit union that ends up merging away for no other reason, but there was no future leadership, or maybe they look at the cost of compliance and technology and can't get there."


What is the obligation of a regulatory agency to preserve that? There's a dynamic conversation going on among the state regulators looking at those issues. Starting with a base level, let's make sure that we are not inherently the reason modestly sized credit unions are going away. After we get through that, what are the next steps going forward? NCUA does a lot of things for more modestly sized, but beyond grants of some technical advice, there are some policy systemic conversations that need to continue to take place.


That topic is a whole episode in and of itself. It's something NCUA deals with. Ultimately, it's a democratic process and the vote of two credit unions. There are mergers that, as a regulator, you can look at and go, "That's a no-brainer. That needed to happen." There's some that you look at and say, "They're selling this as better-for-service for the members." Is that the reason? Is it something that makes sense? It's very rare that it gets voted down once the two boards agree and it goes public, but that would be a separate episode almost on its own. Brian, we have talked about a lot here. Before I wrap up and let you provide your contact information, is there anything else we should chat about before we call it on this show?


We have covered a lot here. I'll leave with an observation that I continue to be amazed as I travel around the country, talking with our stakeholder members, regulatory agencies, and the number of dedicated and thoughtful professionals in the credit union system, either on the regulatory side or the industry side. There are a lot of challenges ahead of the system, but I am optimistic that the credit union system will continue to rise to meet those as I talk to CEOs and C-Suite down to frontline folks and then over in the compliance side and everything else and our regulatory agencies.


There's a tremendous amount of work being done by our examiner agencies. I am confident that the system is prepared to meet those challenges. On that note, the one last challenge we didn't talk about is the challenge of talent and finding new employees. It's a weird place for me after 25 years. A decade ago, agencies had unfilled positions because they hadn't gotten full funding from the legislature. They were carrying vacant positions. Now, they're fully funded with vacant positions because they can't find the talent. I'm hearing the same thing from our credit union side. They cannot find employees and other talents, but the ones who are there and the work they're doing give me hope and a positive attitude toward the future resiliency and vibrancy of the system.

WFC 57 | NASCUS
NASCUS: A decade ago, regulatory agencies had unfilled positions because they didn't have full funding from the legislature. Now, they have appropriate funding but they cannot find the right talent.

That's a fantastic wrap. Credit union people are fantastic people. Credit unions do much good out there. We have been blessed for many years now, adding a couple of years as a consultant and you with the 25 years to have lucked into helping this industry and participating in it. It does so much good for so many people.


NCUA is also dealing with that talent gap. My clients are dealing with it.


At some point in time, the pendulum is going to swing most likely, but that's a big challenge out there.


Brian, if someone is reading this and they say, "I want to talk to Brian or someone at NASCUS about joining," whether they're a league that's not a member or a federal or a state charter, who would like to say, "Let me take advantage of some of these things," what's the best way for them to reach you?


They should reach out through our website, NASCUS.org. Reach out to me directly at Brian@NASCUS.org. I'm happy to talk to you about membership. For all of your readers, if you've heard something you have an opinion on, the most beneficial part of my responsibilities here is talking with the system. You do not have to be a member to reach out to me, debate with me, and share your input. NASCUS does what it does based on the feedback, eyes, talent, and people on the front lines. I would encourage any of your readers. If you've got thoughts about what you read, or you didn't hear things, and you're like, "How come that wasn't on the list?" let us know.


I welcome contact and communication from everybody. I hope that folks who aren't members who encounter NASCUS and take a look at us will find the value in NASCUS as an add-on to the other memberships that they already maintain. It's NASCUS.org or Brian@NASCUS.org. Reach out, let us know what you're thinking, inquire about us, register for one of our events, and talk to us on the road. You will see all of our staff out at our events. I speak at a lot of our events. I'm happy to talk to any of your readers at any time. I hope you invite me back. Maybe sometime in mid-'23, we can revisit and see.


That sounds like a plan. We will have to see if anything we thought has come up. I'm sure there will be something we didn't even think of that happens in April or May that credit unions and state regulators are having to deal with or NCUA is having to deal with. Brian, I want to thank you so much for your time. This was great.


Mark, I want to thank you. I said this to you in person when we talked since you left NCUA. Thank you for your time at NCUA. We didn't always agree, but I always found you an honest broker of our disagreements and issues, and since you've left NCUA, the support you're providing to the credit union system and us when I call you on questions. You continue to serve and be of service. Thanks for your friendship over these years and the ability to talk through issues with you. I always appreciate it.