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"A credit union's job is not to avoid risk; it is to manage risk. If you avoid risk, you cease to grow," declared former NCUA Board Chair, Dennis Dollar, in his remarks to Maine's credit unions at the League's Management Roundtable. As the former Chair of the federal regulator of credit unions and a former credit union CEO, Dollar has a unique perspective of the relationship between credit unions and the regulator, and his insight into today's regulatory environment and how credit unions can not only compete but succeed made for an informative session at the Roundtable. Dollar also called on credit unions to "seize the moment and highlight the cooperative principles and your not-for-profit focus."
Dollar spent much of his presentation focused on the role of the regulator and the role of the regulated, and the importance of each understanding each other's role. "An effective regulator understands the perspective of the regulated, while the regulated needs to recognize that there is a role for the regulator. Having been in both roles, I can tell you that there will always be tension between credit unions and the regulator but acknowledging that each must co-exist is important. When I was at the NCUA, that is how I approached every piece of regulation and is it necessary. Unfortunately, the financial crisis swung the pendulum the other way and we are in a period of heavy regulation, and regulators believe that everything needs to be a violation. As a result, the regulator-regulated relationship is very tense, and many credit unions have become risk-averse for fear that they will be written up by the examiner. Don't make decisions based on what the regulator might think; focus on doing what's right for the credit union and, most importantly, for the member."
According to Dollar, credit unions have many advantages that other financial institutions have but are not highlighting or utilizing them enough. "Credit unions are cooperatives, but too often you are worried about the credit union across the street or two blocks away. Folks, credit unions are not your competition - they are your partners. Shared branching is an example of what you can accomplish when credit unions cooperate; you need to do more of that. You also need to take care of your members at a time when the credit union brand resonates more than ever with consumers. If you work together to strengthen the credit union brand, you will not only keep your current members but you will also attract new members. Collaboration is something the banks will never do; however, collaboration and cooperation is one of your greatest strengths so utilize this significant advantage," added Dollar.
From regulations to cooperation, Dollar encouraged credit unions to re-evaluate your mission and the needs of your membership everyday. "Why are people joining a credit union? What is your credit union doing to validate a person's decision to join? Be ready to answer these questions and if you can't, it means you are standing still and that is not an option."
Resources:
Dennis Dollar presentation at 2015 Maine CU League Management Roundtable