Special Report from Day Three of the Governmental Affairs Conference

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Good morning, readers, and welcome to another special report from CUSO Magazine, featuring all the latest news from day three of the Governmental Affairs Conference in Washington D.C. From beginning to end, the day was filled with lots of learning opportunities and discussions, which means we have a lot to cover, so let’s get started.

But first, if you haven’t read our first two special reports from day one and day two of the conference—which featured key information on AI, the newly-formed America’s Credit Unions, and discussions on regulatory concerns—or you simply need a refresher, be sure to read those two first.

Day three of the GAC started with three back-to-back breakout session slots for attendees, with over 18 different topics and panels to choose from, including discussions on “junk” fees, advocacy and DEI, financial inclusion, what to expect from the 2024 election, CDFI certification and reporting, and more.

Notably, the line to get into the “Regulatory Challenges of 2024: Compliance, Exams, and Advocacy” session stretched far out the door and down the hall, so it’s safe to say regulatory concerns are on the minds of many credit union leaders.

Congress considering AI regulations

Starting off the day’s first and only general session, Caroline Willard, CEO and President of the Cornerstone League, sat down with Indiana Representative French Hill to discuss the future of AI technology as well as the Consumer Financial Protection Bureau (CFPB). Hill was recently selected to serve on the bipartisan AI working group aimed at studying artificial intelligence and determining what steps, if any, should be taken to moderate its usage and mitigate risk associated with the technology.

During the interview, Hill noted the unprecedented adoption and rise of the technology as motivators behind the new working group but also assured credit unions that the group had no intention to start creating legislation on the use of AI.

“When you have a new trend come to fruition as fast as AI has across the country and the business community, naturally, Congress wants to assert and ask questions about what the right role for federal policy as it relates to AI. We don’t expect to try to write laws, we are trying to determine the best course of action related to AI.”

What the best course of action is, Hill didn’t say, he did however reference former Representative Chris Cox’s approach to internet regulation in the Telecommunications Act of 1996 as an example to follow with AI. Not restricting or blocking the technology, but instead, what is done on and with the technology.

Switching gears, Hill moved on to talk about the other buzzword at this year’s GAC: the CFPB. Hill shared the sentiments Nussle stated in his speech earlier in the week, that the organization is overreaching and working to establish relevance, and expressed his hope that the Supreme Court would rule its structure unconstitutional and apply the same oversight and appropriations to the entity as everyone else, along with replacing the director-led structure with a bipartisan board.

Hill’s comments were met with great applause and cheers from the crowd.

State league presidents take to the stage

Shortly after, Patrick Conway, Board Chair of the American Association of Credit Union Leagues, and over twenty league presidents from across the U.S. came on stage as a testament to the leagues’ commitment to collaboration.

In his short message, Conway expressed the importance of advocacy on a local and state level, as it is a critical component of building federal advocacy. He also noted AACUL’s dedicated work on the state level, blocking laws that would harm credit unions as well as lifting up legislation that supports them.

“We worked tirelessly to prevent bad ideas from becoming legislation,” said Conway. “That’s really where the magic happens. It’s being prepared for potential challenges that lie in any state by building a strong service network and strong credit union advocates.”

Combating redlining and creating equitable lending

Following the leagues’ show of unity, the next speaker was Kristen Clarke, Assistant Attorney General for the Civil Rights Division at the US Department of Justice. Clarke spoke on fair lending, redlining, the racial wealth gap, and how credit unions can tackle these issues to create a more equitable system for all.

“Credit unions truly are the cornerstone of a strong economy, an economy that is equally accessible to all people. The people you serve are not just your customers, they are your members, and as a 24-year-member of a credit union myself, I appreciate how important it is that you are able to serve your members and provide communities with safe and affordable products and services.”

As a major part of her work at the Civil Rights Division, Clarke is working to tackle the nation’s long history of discrimination in lending. She expressed her commitment to combating redlining and the efforts and partnerships she is making to do so. Clarke also shared a few statistics on the racial wealth gap, particularly in regard to ownership, noting that a white family is 70% more likely to own a home than a black family.

Clarke expressed that she was looking forward to partnering with the NCUA to improve the situation on the road ahead. As for credit unions themselves, Clarke noted that mere litigation would not be enough, but that partnership with credit unions would be critical in conquering the issues.

“We need partnership, leadership, and collaboration with all of you in this room. You all hold the power to transform the lending industry into one that reflects fairness, access, and equal opportunity for all.”

In closing, Clarke offered five best practices for credit unions to follow:

  1. Engage with your regulators and implement any of the fair lending recommendations that follow potential compliance exams.
  2. Engage with community groups that have real insight and experience with the credit needs of local communities of color.
  3. Ensure that your compliance management system is actually measuring redlining risk.
  4. If and when relying on AI, be sure to do it in a safe and sound manner to prevent harm to members and ensure compliance with civil rights laws.
  5. Make sure you’ve refined internal fair lending monitoring programs.

Nussle Presents Greg Inman Servant Leadership Award

The Greg Inman Servant Leadership Award, created in 2022 to honor the legacy of CUNA Council leader Greg Inman, who passed away unexpectedly in 2021, aims to honor a credit union individual with the heart of servant leader. GAC Host Mia Perez praised Inman’s incredible work during his time in the industry and his commitment to service.

“While so many have such a hard time articulating what a servant leader is, Greg lived it every single day of his life, in every corner of his life—in quiet corners, because that’s what servant leaders do. They make an impact without the big lights and awards,” Perez said of Inman. “This is Greg’s legacy and why we are proud to honor that legacy with this industry award.”

America’s Credit Union’s President and CEO, Jim Nussle, returned to the stage for the first time that day to present the esteemed award to the 2024 recipient, Crystal Long, CEO of GECU, one of the largest credit unions in Texas. Long’s extensive commitment to serving the underserved and impacting her community is what inspired her team to nominate her for the award.

GECU has a department dedicated to serving the underserved as well as a community center in a low-income area, a food pantry, an after-school program for kids where they come to the credit union after school to do their homework, and backpack drives.

In accepting the award, Long credited her team, board, and mother-in-law with bringing her into the industry, “I stand on the shoulders of the board, the leaders, and the staff, past and present, that serve New Mexico and Texas. The work we all do in service to our members cannot be achieved individually, it can only be accomplished through collaboration with the people and like-minded organizations that are aligned and focused on the same objectives.”

Long also thanked the people in the crowd who had afforded her the opportunities throughout her career that inspired her and helped her reach where she is today. “I am grateful and humbled to stand before you today. May God bless you and may God bless all of America’s credit unions across the globe.”

U.S Representative Young Kim slams the CFPB

Keeping in the seemingly unspoken theme of CFPB criticism at this year’s GAC, California Representative Young Kim spoke on the importance of creating financial well-being for all and the various ways that the CFPB’s overreaching is working to harm that mission.

“I have been laser-focused on the oversight of rogue regulators and agencies. We have designated a special parking spot to our favorite regulator, the CFPB’s Director Chopra. The goal? The more time he spends with us, answering our questions, the less damage he’s going to have on you.”

Needless to say, the crowd broke out in a round of cheers and applause at Kim’s words.

Credit unions changing communities

Continuing the conversation on community efforts, Tonita Webb, President and CEO of Verity Credit Union, and Helen Mickel, President and CEO of Tongass Federal Credit Union shared the stories of how their credit unions have been and are continuing to impact their communities in profound and life-changing ways.

Webb shared the story of Othello Square, a 19,000-square-foot gathering plaza in Seattle aimed at providing affordable housing, education opportunities, affordable healthcare, and access to financial services. The plaza is a solution to the community’s growing concerns over development and gentrification in the area, which were raising costs and displacing people.

The community banded together to discuss their needs and specifically reached out to Verity to attend one of these meetings and hear their concerns. They wanted to work with a credit union over a bank specifically.

“They didn’t want us to write a check,” said Webb. “they wanted us to come in and be a part of the community.” Verity agreed to join the project and committed to having a branch in Othello Square and hiring from the community. Verity continued to heart the concerns of the community and used the feedback from these sessions to develop products and services tailor-made to the community’s needs. When it opens, Othello Square will have 230 affordable housing apartments.

Othello Square will break ground in June.

Mickel told the story of Metlakatla, a community on the only Indian Reserve in Alaska, located on Annette Islands. The town was in a financial crisis when its only financial institution, Wells Fargo, packed up and left. In desperation, members of the community hopped on a plane to Ketchikan to find a credit union willing to open a branch on their island. Out of the seven credit unions in the town, Tongass FCU was the only one to answer the call.

Taking planes to and from the island for months, the credit union staff came to open accounts, do basic transactions, and process loan applications. Eventually, they moved into the old Wells Fargo building, which they shared with other businesses. During this time, they developed an advisory board and didn’t limit how many could join. Here, they learned the needs of the community.

Finally, in 2012, Tongass opened its first branch in the community on tribal land. The credit union now has 86% of the community as members and the average credit score in the community has risen by 74 points.

NCUA Board Member Tanya Otsuka addresses attendees

Appearing at her first major event since her confirmation to the NCUA board in December 2023, Tanya Otsuka addressed attendees to convey her vision and priorities as an NCUA board member.

“My work at the NCUA will be guided by a commitment to a safe and sound financial system of cooperative credit that ensures members benefit from fair and affordable products and services.”

Like many of the speakers before her, Otsuka stressed the importance of closing the racial wealth gap and creating financial access for those in underbanked and underserved areas. Otsuka commended the credit unions she had spoken with throughout the week on the work they were doing to fill the needs in banking deserts and provide lending opportunities to those who might not otherwise be able to get a loan.

While understanding that not all credit unions can be low-income designated, Otsuka reminded the audience that all credit unions are responsible for creating a more equitable lending and banking system.

In closing, Otsuka reminded credit unions of the resources and support the NCUA offers and urged them to reach out if they felt the NCUA was missing the mark on its objectives.

“The NCUA’s job as a strong, effective, and independent regulator is critical to protecting the millions of members who rely on us to safeguard their hard-earned money,” said Otsuka. “By focusing on the fundamentals before there is a problem, we can ensure credit unions are well-positioned for the future and able to meet their members’ financial needs in good times and bad. Ultimately, members benefit from access to a healthy credit union system, and protecting that is central to why we are all here today.”

Former Prime Minister Theresa May discusses service above self

Last, but certainly not least, was the final speaker and keynote speaker of the day, the Right Honorable Theresa May MP and former Prime Minister of the UK from 2016 to 2019. May was greeted with a standing ovation from attendees as she joined Jim Nussle on the stage for an interview.

The two discussed a wide range of topics, including the Russian-Ukraine war, the upcoming presidential election (on which she refused to comment on the candidates, but did reference a bizarre incident in which she held hands with one of them), being a woman in positions of leadership, the polarizing climate in politics, and erasing the idea of compromise as a dirty word.

But ultimately, the MP’s main message was that of placing service above self in positions of leadership and remembering who you are there to serve. In her book, The Abuse of Power, May recalls an incident where she told a reporter that her position as Prime Minister was one of service, not power, to which he laughed and countered that in fact, the position she was in was all about power.

Talking with Nussle, May remarked on how she felt this reflected the state of leadership positions, especially in government, where elected officials make the jobs about themselves instead of the people they were elected to serve. In response, Nussle asked what advice she had for the credit union leaders in the room on how to avoid making the job about themselves.

May said, “All of us in positions of leadership need to recognize it as such in everything we do—in how we conduct ourselves and how we do our jobs—and we need to always be thinking about those we are there to serve. The fantastic work everyone here is doing to support people in achieving their dreams means always recognizing that it is the people who elect us we are there for. Never forget the people who put you in that position, because they are the ones you serve.”

The last general session of the week will be held on Wednesday morning when the Governmental Affairs Conference wraps up, so make sure not to miss the next update!

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