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Chairman Johnson Stresses Activism and Dialogue During Address to NAFCU’s Congressional Caucus

Alexandria, VA, September 18, 2006- National Credit Union Administration (NCUA) Chairman JoAnn Johnson today sounded a note of inclusion and openness during her remarks to the 33rd Annual NAFCU Congressional Caucus in Washington D.C. Chairman Johnson took the opportunity to encourage the over 400 attendees to continue “their important work of fostering communication with lawmakers on Capitol Hill,” particularly regarding such pressing issues as Risk-Based Capital and Service to Underserved Areas.

Chairman Johnson noted her continuing advocacy before Congress for the reform of the current Prompt Corrective Action regime for credit unions by the creation of a “Risk-Based Capital system that would allow you, the industry, and us, the regulator to manage risk more effectively.” Johnson stated that the “present regime is a one-size fits all system that creates inequities,” and urged the NAFCU attendees to carry a message of Risk-Based Capital reform to Capitol Hill in the waning days of the 109th Congress.

A legislative change to the underserved area statute was also identified by Chairman Johnson as a priority. Johnson addressed the concept of allowing all federal charter types to serve the underserved communities, stating that “it just doesn’t make sense not to encourage credit unions to reach out to individuals in need. These communities are logical candidates for credit union service, and Congress should act” to redress the statutory imbalance.

Chairman Johnson, in her fifth appearance before the NAFCU Caucus since joining the NCUA Board in 2002, devoted a major portion of her remarks to the recent NCUA Letter to Federal Credit Unions 06-FCU-04, concerning evaluation of credit union earnings. “I strongly encourage balance in this process,” said Chairman Johnson. “Credit unions must balance return on assets (ROA) against the creation of future benefits to members. NCUA must take a similarly balanced view when it comes to assessing credit union earnings. Compelling credit unions to strive for an arbitrary 1% ROA is not an acceptable or accurate indicator of a healthy and well run credit union.” Chairman Johnson termed the Letter to Federal Credit Unions an effort to demonstrate to the credit union system what NCUA is communicating to credit union examiners and noted that the Letter has been “well-received, at least in part, because of what it says about the open dialogue that I believe NCUA’s Board has with you in the industry. It’s working.”

The National Credit Union Administration, governed by a three-member board appointed by the President and confirmed by the Senate, is the independent federal agency that regulates, charters, and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, also operates and manages the National Credit Union Share Insurance Fund (NCUSIF), insuring the deposits of over 83 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions.