Thank you, Senator D'Amato, Senator Sarbanes and other members of the Senate Committee on Banking, Housing, and Urban Affairs for the opportunity to present myself as a nominee to the National Credit Union Administration Board (NCUAB). I look forward to answering any questions you may have.
It is a distinct honor and privilege to be nominated by President Bill Clinton for a position on the NCUAB. I certainly look forward to fulfilling this term if given the opportunity by members of the Senate.
My professional background has focused on the financial services industry. In my native and home states of California and Missouri, as well as in Washington, D.C., I practiced corporate and real estate finance law for about ten years. My practice did not include representing credit unions, but my representation of various financial 'institutions over the years, I believe, well- equips me to venture into the area of supervision and regulation of financial cooperatives.
Legal and management experience I have gained through working in a number of large, nationally recognized firms has been helpful as I work with others to manage the NCUA and develop regulations. As I perform my duties, I will endeavor to stay informed of the issues, exercise my best judgment in decision making and continually develop a better sense of how our actions as a Board will impact the credit union industry both in the short- and long-term.
I am happy to report certain facts about the credit union industry that indicate its relative good health from a safety and soundness perspective. Capital ratios are at an all-time high, while credit union failures are at a record low - only 19 last year out of approximately 12,000 credit unions nationwide. There have been no unreserved losses to the National Credit Union Share Insurance Fund for two consecutive years. Capital assets grew last year at a rate of 11 percent, the tenth consecutive year of strong capital growth.
Loan delinquency and net charge-offs remain at or near historic lows, respectively accounting for only one-percent and .5 percent of the total loans made by credit unions. Profitability, as evaluated by the return on average assets ratio, was a healthy 1.1 percent for 1996.
There is some uncertainty throughout the credit union industry as the Supreme Court prepares to determine how credit unions may legally expand membership. The high court recently granted certiorari in the AT&T Family Federal Credit Union case in which the Court will interpret the legal boundaries of fields of membership under the Federal Credit Union Act. The Agency as well as the entire credit union movement awaits a decision from the Supreme Court about this issue within the next year or so.
In the meantime, I look forward to working with the other Board members. The Agency is currently taking steps to reduce paperwork and other regulatory burdens on credit unions with its Regulation Review Program. The program is designed to update and streamline NCUA regulations, focus regulations on key safety and soundness concerns and Agency objectives, and eliminate requirements that impose inefficient and costly regulatory burdens on federally 'insured credit unions. For example, the NCUA has undertaken a review of all of its Interpretative Rulings and Policy Statements with an eye toward easing the compliance burden in federally chartered and federally insured credit unions and providing more valuable guidance by updating and simplifying ineffective or outdated policies.
I expect Agency supervision efforts and regulations will continue to focus on the safety and soundness of the credit union system. At the same time, the Board will provide guidelines to credit unions to help them assess credit risk and thereby better manage the overall stability of the industry.
Again, thank you for the opportunity to address the Committee. I would be
happy to answer any questions you may have.
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