LAHAINA, Maui–A member of the NCUA board and a senior leader with NASCUS have responded to number of questions posed by credit unions, including what the new Trump administration means for regulation, what CU boards should be watching for, and which is better for a credit union, a state or federal charter?

Responding to audience queries during Rochdale’s Volunteer Leadership Institute were NCUA Board Member Todd Harper and NASCUS SVP-Policy and Supervision John Kolhoff. 

Here’s a look at some of the questions and the responses provided:

Q: What does the political shift mean to credit unions and regulation? What can we expect?

Harper: I used to work for a large corporation and every time there was a CEO change we got a different version of the “Who Moved the Cheese?” books.  Now there are all of these (White House) orders coming out and there’s a lot of confusion. At the state and federal level our people are trying to figure out what those things mean and we’re going through that.

This administration seems to be very interested in digital assets, cybersecurity and cryptocurrency and the like, so we’ll see what that does for the industry.

Kolhoff: Todd said (earlier that) discussion is a key. It doesn’t necessarily matter if Todd and I necessarily agree on any particular issue; what matters is we’re talking about the issue in a respectful nature and are listening to each other so we can go forward together now on these 

Q: From your perspective, what would you say are the top one to two key risks, opportunities? 

Harper: First of all, cyber security. You really need to dig down and make sure you’re practicing good cyber hygiene and that you’ve got good policies in place and that there is robust discussion going on.

You have to be doing patch management and updating your software on a regular basis. We’ve seen that as a problem at some credit unions and some vendors that have experienced cyber security incidents.

Credit risk is another issue we are seeing now. Credit card delinquencies are higher now than they were after the 2008 financial crisis. You’ve got other loans that are also quite high with delinquency ratios, so make sure you’re working with your members.

As for key opportunities, first and foremost this is an environment where you’ve got to be nimble and quick and come up with new ideas to serve your members and so there is an opportunity to embrace technology. Members can transfer money with just with the press of a button. Make sure you’re doing it right and that you’re offering products that your members want and need. 

One of the things I often hear about credit union boards is that they tend to be older and they tend to have people who are outside of their prime borrowing years. You need (people) on your board who come from diverse perspectives. I met with a credit union in Puerto Rico, for example, that puts some younger people on the board and they were able to move more quickly with technology.

And my last point on that would be succession planning. We passed a rule in December and now we’re expecting credit unions to look at their succession planning and be updating their plans. 

Q: We are in a state-chartered credit union in California. Is there any trend of movement to federal charters?

Kolhoff: NASCUS firmly believes in the dual charter system. We want to make sure the dual charter system survives and we firmly believe the differences make us stronger and that choice makes the whole industry better for competitive reasons.

Interestingly, for years we had seen it go back and forth, and there was this predominance of state charters flipping to federal charters up until a couple of years ago. As of September 2024, I think there were two charter flips to state and two charter flips to federal.

We are trying to make sure that we maintain the benefits on state side. In some states the laws are very consumer friendly, particularly in their take on fees and the reporting of fees.

(When I was the regulator in Michigan) I wanted competition in my state because I wanted my credit unions to have to compete with these other credit unions in the country,

Hawaii is one of the states that doesn’t have any credit unions with a state charter because this state charter has basically become antiquated and so it doesn’t really make sense (to have) state charters. But we haven’t been in talks with this state and other states. I’m working with them to say, ‘OK what are the things that work in other states that should be brought to Hawaii to make that charter more competitive?’ 

I probably have seven states that I’m working with right now where we’re walking through their statue and talking about what makes them less competitive, what makes them more competitive, what things we should be talking about.