The Business of Government Hour


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The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. The executives discuss their careers and the management challenges facing their organizations. Past government executives include Administrators, Chief Financial Officers, Chief Information Officers, Chief Operating Officers, Commissioners, Controllers, Directors, and Undersecretaries.

The interviews

Join the IBM Center for a weekly conversation about management with a government executive who is changing the way government does business.

Dennis Dollar interview

Friday, December 27th, 2002 - 20:00
Dennis Dollar
Radio show date: 
Sat, 12/28/2002
Intro text: 
Dennis Dollar
Complete transcript: 

Arlington, Virginia

Tuesday, October 22, 2002

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business of Government. We created The Endowment in 1998 to encourage discussion and research into new approaches to improve government effectiveness. Find out about The Endowment by visiting us on the web at

The Business of Government Hour features a conversation about management with a government executive who's changing the way government does business. Our conversation this morning is with Dennis Dollar. Dennis is the chairman of the National Credit Union Administration.

Good morning, Dennis.

Mr. Dollar: Good morning, Paul.

Mr. Lawrence: And joining us in our conversation is Debra Cammer.

Good morning, Debra.

Ms. Cammer: Good morning, Paul.

Mr. Lawrence: Dennis, could you give us an overview of the mission and the activities of the National Credit Union Administration?

Mr. Dollar: The National Credit Union Administration is the federal agency established by Congress, an independent federal regulatory agency who is charged with the responsibility for chartering, supervising, and regulating all federally chartered credit unions in the United States and administering the National Credit Union Share Insurance Fund, which is the equivalent, I guess you could say, of the FDIC. What the FDIC fund is to the banks, the National Credit Union Share Insurance Fund is to credit unions.

We insure the accounts of all depositors up to $100,000, and administer that Share Insurance Fund. So we are the regulator of federal credit unions and the insurer of all federally insured credit unions, whether they are federally chartered or state chartered.

Mr. Lawrence: How big is your organization, and what type of skills do the employees have?

Mr. Dollar: Our agency has a little bit less than a 1,000 employees. About three years ago, we were about at 1,050. We are now at around the 945 range. We have been engaged in some efforts to try to streamline the agency and improve our efficiency some, but we're right in that range of 1,000 employees.

We're a wide-flung organization, as an examination and supervision agency that actually hires examiners that go into credit unions, and conduct supervisory visits, that do examinations and assign rating codes to the safety and soundness of America's credit unions.

We have about 600 of our employees that are field-based. In fact, we have one of the highest percentages of employees that telecommute of any agency, because they do not all operate out of a regional office somewhere. We do have 6 regional offices throughout the country, but they are supervisory in nature. Our examiners, about 600 of them, operate out of their homes. They go to the credit unions, they conduct their examinations. They come back and report to that regional office.

Then we have here in Washington, actually in Alexandria, Virginia, which is where our headquarters is located, we have about another 400 employees that are the supervisory employees that are dealing with the regulatory issues as well as the oversight issues of those 6 regional offices and those 600 scattered employees. Most of our examiners come from an accounting or auditing background. They are examiners by nature, so therefore, they are very meticulous, detail-oriented compliance officers, but also have to be very good in the ratio evaluating mode and asset liability evaluating mode.

We have a very extensive training program that prepares them, and I think we have had tremendous success. America's credit unions have the highest asset level that they have ever had in their history. They have the highest capital position, which is a net worth position, of any time in their history. We have never had one penny of taxpayers' dollars that has been required to bail out a federally insured credit union. It is been one of I think the true success stories of the financial services industry of our country, even though it's a small segment. It's a growing and emerging segment, and we want to make sure they are safe and sound as they continue to grow and emerge.

Mr. Lawrence: Can you give us a sense of how many credit unions there are in the country?

Mr. Dollar: Right about 10,000 now, Paul. Probably 10 years ago, there were about 20,000 credit unions. Credit unions have seen what a number of industries have, and that is a consolidation over the course of years. So there are about 10,000 credit unions today. About 6,500 of those are federally chartered; about 3,500 of those are state chartered. But 97 percent of them are federally insured. And they range in size from a couple of hundred thousand dollars in assets that might just be the credit union for a very small business or a small church or a small association, to the largest credit union in the world, which is maybe Federal Credit Union, which is closing in on I think in the vicinity of 13 to 14 billion dollars in assets.

The overwhelming majority of credit unions are small; over 65 percent of them are 20 million or less in assets. But they meet a real need, I think, and the market continues to grow. And as it does, we want to make sure that these credit unions are not just here for this generation of credit union members, but for generations to come. And that's where our role come in, as regulators, examiners, supervision program.

Ms. Cammer: Dennis, how would you describe the relationship between NCUA and the federally regulated credit unions?

Mr. Dollar: Well, of course, we are their chartering entity, Debra. But, we also -- once they are chartered and are in place, we have an ongoing safety and soundness evaluation program and examination program which, every 12 to 18 months, we will go into every federally chartered credit union with actually a site visit. We will look at their policies; we'll pull loans from their loan portfolio; we'll look at their investment portfolio; we'll ensure that they are complying with all rules, regulations. We will examine their numbers and ratios as it relates to the safety and soundness standards that we monitor. And, I would say that the relationship is the standard regulator-regulated relationship. And that is, they always dread seeing us to come, but they realize how important it is for the integrity of the credit union system that there be in place an effective system of regulation and oversight. And that's what we provide.

We also work hand-in-hand with the state regulators in the 50 states for those state chartered credit unions. And because we are the federal insurer and most of the state chartered credit unions are federally insured, we oftentimes work hand-in-hand in a joint examination with the states when the states go in. So we oversee all the federally chartered credit unions and we work hand-in-hand with the states on state chartered credit unions in our roles as insurer.

Ms. Cammer: Now, you mentioned the National Credit Union Share Insurance Fund. How would it be used in the event of financial crisis?

Mr. Dollar: Well, a financial crisis that resulted in the forced conservatorship or liquidation of a credit union would bring the Share Insurance Fund into play to make sure that after all the assets of the credit union are liquidated and all of the liabilities are paid, that if there is any shortfall in what a member had in their depository account, up to a maximum of $100,000, the same as the FDIC fund, then the National Credit Union Share Insurance Fund would make up that difference.

And it is a very, very strong fund. As I said a moment ago, the Fund has never been unable to, not only meet any losses in credit union, but to be able to meet losses and still continue to grow its equity level. In seven of the last eight years, we have been able to actually pay a dividend back to the credit union that invested in the Fund.

This Fund is not funded by taxpayers' dollars. It is backed by the full faith and credit of the United States government. And if the Fund ever exhausted itself, the full faith and credit of the United States government is there to back it up. But that has never happened. And in fact, we have never seen our equity level go below one percent.

And so we have a very strong Fund -- we've been able, as I said, in seven of the last eight years, to be able to pay a dividend back to those credit unions who funded the Share Insurance Fund. They fund with one percent of their assets and we adjust that on annual basis, based upon either asset growth or asset shrinkage. And they then keep one percent on deposit on us; we invest that.

The earnings on that investment, we use to be able to pay any losses that may come, and also to build that equity level up to be able to cover against tough times or hard times. And we are very proud of the fact that unlike some of the other insurance funds, if you recall the savings and loan crisis of the '80s that cost the American taxpayers some $40 billion to be able to satisfy all of those claims, we've never had the first penny of taxpayers' dollars been called upon to bail out a credit union. We think that's a sign of the conservative nature of credit unions and how they do their business well. But I think it's also -- if I pat our agency at the back a little bit, a sign of good oversight, good management, good integrity in our supervision process to make sure we get a hold of problems early and don't ever let them get to a crisis stage, if we can help it.

Ms. Cammer: Dennis, can we switch gears a little bit. I'd like to have you explain to the listeners what your role is as chairman and how the three members of the Board interact with you.

Mr. Dollar: Well, Debra, the NCUA Board is a three-member board appointed by the President, confirmed by the Senate, that is the policymaking board for the National Credit Union Administration.

We make and adopt and promulgate all rules and regulations that federal credit unions operate under and that help to administer the Share Insurance Fund.

As chairman, I'm designated by the President to be the presiding officer of the Board, to set the agenda for the Board, to be the primary spokesperson for the agency and all matters of dealing with other agencies, other regulatory agencies, the Congress, the Administration, and the like. We have an excellent board. We have a three-member board at present that works together very, very well. We are required, as most regulatory boards are, to come from a bipartisan background; in other words, all three members of the Board cannot be from the same political party. And we have presently myself serving as chairman, Debra Matz from New York, who is serving as one of our Board members, and JoAnn Johnson from Iowa, former state senator from Iowa who's serving as the other Board member.

We think we have a good board in place and we think that some good things are happening in America's credit unions.

Mr. Lawrence: That's a good stopping point. Stick with us through the break as we continue our conversation with Dennis Dollar of the National Credit Union Administration.

Have you heard of the initiative called "Access Across America"? We'll ask Dennis more about it when The Business of Government Hour returns. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dennis Dollar, chairman of the National Credit Union Administration.

Joining us in our conversation is Debra Cammer.

Well, Dennis, I wanted to ask you about your career prior to serving on the NCUA Board.

Mr. Dollar: Well, Paul, I've had a career that is both a private sector career and public sector career. Shortly after my graduation from the University of Mississippi in 1975, I ran for a seat in the Mississippi House of Representatives. Mississippi is my home state. I'm from Gulfport, down on the Mississippi Gulf Coast.

And I ran for and was elected to the state legislature in 1975 at the age of 22. I was one of the youngest members to ever serve in the state legislature in Mississippi. And so I began my public career in elected office. And I served eight years there. In addition to my years in the legislature, at the same time, I was in the real estate business and affiliated with the local junior college.

Upon my leaving the legislature, after eight years, I went into administration in the college that I was teaching at. And I served in that position until 1991. In late 1991, I was contacted by the Gulfport VA Federal Credit Union, a relatively small credit union, there in the Mississippi Gulf Coast area. They needed a CEO. They needed somebody with proven leadership skills. And they said that my leadership record at the junior college that I have been affiliated with, as well as my public career, having been a member of the legislature and the involvement in the community that that brings, was exactly what they were looking for. Interestingly, I had never been in the financial services arena, but I felt like that good management abilities, good leadership training, willingness to put the principles you have learned in your career in place works in any field.

You can learn the details. It is those innate abilities to lead and to bring to the leadership table the attribute that can be successful -- that have proven themselves, and I'm certainly not the only one. There have been thousands and hundreds of thousands of leaders who have moved their leadership abilities from one field to another and been able to be very successful.

So I went to the credit union in '91, knowing that it was a change in direction, but believing that those attributes would be successful there as they had been in other fields. I took a fairly struggling credit union that was having some problems; interestingly, problems with the very agency that I am today the chairman of, and we were able to turn that organization around, take it from being a relatively borderline credit union as far as its long-term financial stability to an award-winning credit union, winning local and national awards in every area, from financial performance to the social responsibility programs that we had in place.

And so after serving in that capacity for about six years, I was contacted by the Senator from my home state, Senator Trent Lott -- who happened to be serving as the Senate majority leader at that time -- about the Republican seat on the NCUA board. It was coming up for appointment, and that was during the Clinton Administration.

The traditional protocol is that the President will many times defer to the ranking senator from the other party for appointments to the other party's seat on these various boards and commissions. And he said, you've got a background in the political arena. You would function well in Washington. You have a background in the credit union arena. We need someone who understands and knows the issues, would you be interested in coming up and serving on the NCUA Board.

I did my homework and came to the conclusion that would be a good career move for me and my family. And so I told the Senator, if you could make it happen, we'd love to come and serve. And so he was able to bring that about, and I was appointed in 1997 and was confirmed in October -- took my seat in October; served as a board member from '97 until 2001.

When President Bush was elected and there's now Republican in the White House, he looked on all of these boards to try to find either the Republican that was serving or someone from his side of the aisle to elevate to the chairmanship. He was, I'm very honored to say, impressed by what we had done as a member of the Board, and elevated me to the chairmanship in September of 2001.

Mr. Lawrence: Give me a little perspective on having seen both sides of it. You have been an elected official and an appointed official. How does it feel to have seen both sides?

Mr. Dollar: You know, as Judy Collins sang back in the '60s: "I've seen life from both sides now." It is really an interesting perspective to have seen life from both sides now. I'm the only chairman of the NCUA Board to ever have been subject to an NCUA examination. I'm the only chairman of the NCUA board ever to have paid an NCUA operating fee that supports the budget of the agency. I think that does give a very unique perspective.

It has enabled me at so many staff meetings with our outstanding leadership team there at NCUA, when an issue might come up and they might say, "When we pass this regulation, here's how it's going to work in America's credit unions," to be able to say "no, wait, you don't understand; in the real world, here what's going to be the cause and effect of this action." And I think bringing that to the table has not only enabled me to be more effective regulator of credit unions, having understood the issues, but it has helped us as an agency to be a more effective agency. And I believe it is in some ways helped credit unions to have some higher confidence level that although they may not always agree, and they certainly do not, with every decision that we make from a regulatory or supervisory perspective, they know that the guy that's heading the agency at least has been where they are, has been in the trenches of the credit union movement. And I think that credibility does help you be a much more effective regulator.

Ms. Cammer: Now as the chairman of the NCUA, you're spearheading an initiative called "Access Across America." Can you tell us about the program and what the goals are?

Mr. Dollar: "Access Across America" is a name we have given to an umbrella of efforts that we are making at the National Credit Union Administration to try to encourage credit unions to extend their field of membership; that is, the people that they are legally or regulartorily authorized to serve, into some of the underserved areas of America.

There are over 90 million Americans living today in census tracts that are designated by the U.S. Treasury Department as underserved or unbanked. Many of these are underserved or unbanked because the traditional for-profit financial institutions have fled these areas. Unfortunately, what they have left many of these communities to is to pawnshops and check cashers and the rent-to-own companies who at 400 or 500 percent return can make a profit there, but unfortunately, the impact on those communities has been very unfortunate. And I don't believe anyone's ever going to achieve the American dream if their primary financial institution is a check casher or pawnshop.

So we have tried to encourage credit unions, which, by their nature and by their definition are not-for-profit financial cooperatives. As not-for-profits, they don't require as high of a return to be able to go in some of these areas and offer these financial services. So the "Access Across America," it has been our goal to try to see credit unions move in to every one of those census tracts to provide lower cost financial services to every one of those 90-plus million Americans living in those underserved areas.

The result is twofold; not only is it consistent with the credit union heartbeat -- and credit unions were formed for the purpose of providing access to credit to people of largely modest means that may not be able to gain credit from traditional financial institutions. They were formed as an alternative. And they still to this day, although credit unions have grown and they offer a wide range of services to people from all economic levels and all works of life, they still have a heartbeat for making sure that the little guys are not forgotten. So in many of these communities, they need access to some lower cost financial institutions.

So it's a win as far as helping credit unions continue to meet their mission. But it's also a win for us as a regulator, because one of the concerns with credit unions has been the fact that they have had a limited field of membership. They were restricted to the employees of a certain company or a certain association; some to a community, but a limited community and a very localized community.

We as regulators realize the importance of diversification. We don't ever want to see a credit union go under because their sponsor group goes out of business or gets bought out by another company. We want to see these credit unions continue to survive. And as a regulator, that's important from a safety and soundness and financial stability perspective.

So "Access Across America" is designed to be not only an opportunity to extend financial services to some people who really need it in these underserved communities, but also as a source of some diversification opportunities for these credit unions; to enable them to be able to diversify their risks.

Yes, there's increased risk in some of these areas. But it's a manageable risk, and there's some good business in these areas. And with a good business plan, with a well-thought approach to going in these areas, we have found credit unions with tremendous, tremendous successes. And we see them making a tremendous difference in these communities.

If I might, let me just share you a couple of statistics and show you how successful "Access Across America" has been just in the two years it's been in place. In 1999, the first year that credit unions were able to do it; before we began really emphasizing it, we had seven credit unions that adopted underserved areas. About 235,000 Americans lived in those areas. Last year, 2001, only two years later, with our "Access Across America" initiative in place, with the streamlining of process to remove regulatory impediments and make it easier for credit unions to adopt these areas, we had 165 credit unions that adopted underserved areas.

They actually adopted 282 underserved areas. Some adopted more than one. 16.1 million Americans who at the beginning of the year 2001 were not eligible to join a credit union were eligible by the end of year. That's an increase from 235,000 just two years ago to 16.1 million. Obviously, this is done without any regulatory mandate to force credit unions to do it, and we did through a regulatory empowerment approach without lowing standards but streamlining process, we made that possible. This year, in 2002, we have already got 184 credit unions through the end of September.

We already exceeded last year's number; 303 underserved areas, also exceeding last year's number. 17 million Americans living in underserved areas that are eligible already this year. We have already exceeded in nine months the successes of last year. We're very proud of the results and we think that it's going to make a real impact in a number of those communities. Mr. Lawrence: That's a good stopping point. Come back with us after the break as we continue our talking about management with Dennis Dollar of the National Credit Union Administration. This is The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dennis Dollar. Dennis is the chairman of the National Credit Union Administration.

Joining us in our conversation is Debra Cammer.

Well, Dennis, let's switch gears a little and talk about management within NCUA. We know that last year, you commissioned a working group on Accountability In Management, or AIM. What are the results of the AIM group study?

Mr. Dollar: One of our goals was to try to bring about efficiencies within the organization. As I mentioned a moment ago, Paul, we had 20,000 credit unions that we were regulating or insuring in 1985, and today, it's down below 10,000. Naturally, you cannot continue to grow an agency or keep an agency staffed to oversee 20,000 institutions when you're now only overseeing 10,000.

So we wanted to make sure that we had the most efficient operation possible. We felt like we owed it to our stakeholders to make sure that we were as efficient as possible with their dollars. As I said, the agency is funded entirely by either operating fees that we charged to our federal credit unions, or a transfer for overhead that we bring from the Share Insurance Fund. That again is funded by federal and state chartered credit unions. So the credit unions pay our bills entirely. And we have an obligation to them to be as good a steward as possible.

So AIM was put together with some of our best and brightest minds to just do a very serious internal self-study. We try not to be personnel-driven but try to be efficiency-driven. And one of my goals was try to see if we could not result over a two-year period and at least a minimum of four percent cutback in the staffing of the agency without any layoffs, without any forced retirements, to be able to see if we could find a way to do it through attrition, to disrupt our agency as little as possible even as we achieve these efficiencies.

We began to look at how we're allocating out resources, which is absolutely necessary if you're going to bring about a four percent reduction without any layoffs, without any RIFs, without any forced retirements. You've got to really look at your limited resources and see how we're applying them. Particularly when you're an agency with only 1,000 employees. It is harder to get a four percent cutback in an agency of 1,000 than it is in agency of 10,000. And so, what we did, we really went to the foundation of what we do, which is safety and soundness related, our safety and soundness oversight program, and said how can we allocate our resources more effectively, to be more consistent with the President's Management Agenda, to be results-oriented, to be citizen-centered and not bureaucracy-oriented, to try to be market-based in our approach, to realize that the credit union community is changing; realize the risk factors are changing from where they were two years ago, let alone five years ago or ten years ago, as credit unions offer more and more services.

And so we began to retool our program more towards a risk-focused examination program, in which we said every credit union doesn't need to be examined every year. Some of them perhaps could go out to 18 months based upon on their lower risk portfolio; whereas there are others based upon either their higher risk or perhaps problems that they may having in the credit unions that may need us to go in there more often than once a year.

And so as we began to look at risk-based scheduling and risk-focused examination, we found that we could reallocate our resources and be much more effective in focusing on risk majoring on majors, if you will, instead of majoring on minors, and actually save tens of thousands of examiner hours in the process. Those examiner hours, we were able to free up to be able to help struggling credit unions, credit unions that may have problems or concerns, higher risk portfolios; and others, we would be able to actually reduce through attrition of some of our staff. And we're well on the way to doing that. 3.6 percent of our reduction, we have already achieved, and as we go to our 2003 budget year, we will exceed the four percent goal that we put forward in AIM.

Ms. Cammer: What kind of training are you offering your employees so that they can more effectively analyze the risks?

Mr. Dollar: Debra, that's the key in any implementation of a management program or management shift in direction; the training of your people. And particularly when you're doing a cultural change, where you're saying no longer are we going in on the same time frame every year to every credit union with the same checklist in every credit union. We're now going to go in based upon the risk portfolio of that credit union.

That requires a real change in our examination core, and we've done extensive training not only through our training programs that we have on an ongoing basis, whether it be CD-ROM training or the like. We this summer brought together every examiner in our agency for four weeks of intensive training, in which they did nothing but receive training on the new risk-focused examination. It's a part of changing not just our examination approach, but changing more importantly their examination approach, and when you have examiners doing things a certain way for 15-20 years, it is a cultural change.

Same thing happens to the private sector. When I came in to that credit union, we had loan officers that have been administering the loan policy the same way for the last eight years. To come in and change from a culture of trying to find a way to disapprove the loans so that you don't have to that extra paperwork, to trying to find a way to approve the loan if you can within proper risk management parameters is a complete cultural change. Some made the change; some didn't. It was a management challenge. We had the same thing in NCUA, but I've got to say that our staff has responded very well, very positively, and I think the key is how you sell it and the training you give to where you don't just go forward and say "We're changing our approach. Jump on board. Hope it works for you."

But to actually go through this extensive four-week training. We even brought in the state regulators who are our partners in overseeing state chartered credit unions, and gave them this same training. So if they choose to do the same type of risk-focused program that we do, that we will be able to work in coordination with each other.

The results of that are already paying off as I travel through the country and meet with credit union groups and trade associations and the like. The feedback that I'm getting, although we're only a matter of months into this, is that it is a much more streamlined process, much more efficient. They're focusing on where the risk is. They're not rummaging through $50 travel vouchers. They're in there looking at the asset liability management of the credit union; they're looking at the risk portfolio of either investments or lending. They're looking at our policies to make sure they're in place, and you, as an agency, are getting in my credit union and getting out more quickly, more efficiently, and the results are very powerful.

Ms. Cammer: You mentioned earlier the President's Management Agenda. I'm wondering if you can talk a little bit more about how AIM and the PMA relate and how you're leveraging that to improve the organization.

Mr. Dollar: One of the publications I that keep at the edge of my desk all the time is the President's Management Agenda. Not only am I an appointee of his Administration and therefore am committed to following his directives, I believe that they are tailor-made for our agency. What his whole focus is as it relates to the principles of reform that are in the President's Management Agenda is to get away from doing things the way that you've always done them and to get away from a bureaucracy-driven approach to administering an agency and to get to a results approach that impacts positively the person who is regulated without lower standards in the process.

And so AIM was an offshoot, if you will, from the President's Management Agenda, but it is I think the reason for the President's Management Agenda, to say just as GIPRA was designed to say, and other strategic planning initiatives, that you can't do things the way you've always done them in a changing and dynamic marketplace. And the financial industry is probably the most fast-changing and most dynamic marketplace out there today. And for credit unions who only have three percent of the deposit base in this country, if you add all the deposits of America credit union together, they don't come up to the asset level of Citibank.

So we're a relatively small player, but an emerging player and an important player, and a player that you want to know that those $500 billion of insured deposits that are out there are safe and sound. But the changes that are being required of these credit unions require them to be able to adjust quickly and us to able to do so as well. And that's why when the President says in his management agenda that he wants agencies to be market-based in their approach, he wants us to realize that that marketplace out there changes faster than we as government do at times.

And if we are not willing to allow those that we regulate to adjust to that changing marketplace, we may create the very problems we're trying to avoid, and that is safety and soundness problems by virtue of the fact that the marketplace moves more rapidly than the ability to credit unions to adjust to it. So we have to change our approach to be empowering within the bounds of safety and soundness, to be willing to help someone meet a standard rather than lowering that standard. And I think that's where AIM and the President's Management Agenda mesh very effectively.

Mr. Lawrence: People are an important part of change, and I note that in the strategic plan for the next five years, human capital's called out rather boldly. What are the challenges you're facing in this area?

Mr. Dollar: Well, the challenges that we are facing are the same challenges that other agencies are facing, and frankly, the private sectors are facing as well. And that is that there is greater accountability for the bottom line of our budget from our stakeholders, but yet there is also at the same time a greater demand from them for a more effective organization, a more professional organization. So we had to have the challenge of walking that very difficult and fine line between efficiency but still providing the level of service that our stakeholders deserve. It's the biggest challenge we've had, but it's not unique to us, and I'm very pleased with the results we've shown this far.

Mr. Lawrence: That's a good stopping point. Come back with us in a few minutes as we continue talking about management with Dennis Dollar of the National Credit Union Administration. What does the future hold for NCUA? We'll ask Dennis for his thoughts when The Business of Government Hour returns. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dennis Dollar. Dennis is the chairman of the National Credit Union Administration.

Joining us in our conversation is Debra Cammer.

Ms. Cammer: Dennis, what are some of the new technologies you're seeing credit unions use to better serve their customers?

Mr. Dollar: You know, Debra, we've spent a lot of this discussion this morning talking about change and the fact that the environment is changing and the dynamic nature of the financial services industry is changing, and I would have never dreamed of some of the technological advances of the last five years in financial services. When I left my credit union to come to the NCUA Board, less than one percent of the credit unions even had a website, let alone interactive home banking.

Today, I just got our most recent statistics, that show over 10.7 million credit union members are now using online internet banking at their credit union's website. And when you realize that there are a little over 80 million credit union members nationwide, that's a remarkably high percentage in a very short period of time.

We've gone from a period where perhaps seven years ago, there were very few credit unions who had anything more than an informational website, to now where over half the credit unions have an interactive website actually able to do transactions, and very likely five years from now, a credit union would not be able to compete in the marketplace without that. I mean, that is a required change and adjustment for credit unions, but it is also for us, because all of a sudden now, we have to have our oversight program much more flexible and adaptable to looking at online transactions, online security -- when I said a moment ago that we're going to be a more risk-focused examination program, and if you're going to be risk-focused today, there's one thing you have to look at is the security of the internet transactions.

So I think that we have seen change, we will continue to see change. I'm not a very good crystal ball type of guy to know exactly what the changes are going to be five years from now or ten years from now. One thing I know for sure, there will be changes and they will be more expensive to deliver, and that more and more credit unions, 80-plus million and growing members will be demanding those changes to be provided and those services to be provided; more of them will be technologically based. And credit unions will have to walk that line from being high tech to also being high touch. And they don't want to become the large impersonal financial institutions that many traditional banks have become. That's a part of the credit union difference, a part of the credit union uniqueness.

But yet their members are demanding more and more of those services. They got to be able to find a way to provide those services, technologically advanced and costly that they may be, and while still maintaining that high touch that has been the nature of what a credit union is. So, it's going to be a challenge for credit unions. Its going to challenge for us, but it is one that I believe that credit unions are up to, and I know that we as an agency are adapting to and our strategic plan is very much focused towards being that type of an agent of change without lowering standards in the process.

Mr. Lawrence: But, I will ask you to pull your crystal ball out and talk about your vision for NCUA in the next five to ten years.

Mr. Dollar: Oh, we do have a vision statement for NCUA and a strategic plan that we just this month updated for 2003-2008 period. And one of the primary focuses of it if you can capsulize it is, yes, there are certainly human resources aspects, there are efficiency aspects. But one of the true foundations of this strategic plan is that we want to be much more outwardly oriented. So many times when you do a strategic plan, you focus inwardly. How can we restructure a department? How can we cut down on some of our procurement costs?

All of those internal type of things, and they are certainly important to study. But when you're in the regulatory arena, particularly regulating an industry in which the marketplace is changing as dramatically as it is in the financial services delivery arena, you've got to be outward-looking in your strategic plan. And so we have tried to draw a plan that is designed toward a maximum of earned flexibility. I emphasized the word "earned flexibility." We've put in place a regulation we call "reg flex" and an entire approach we call "reg flex," which is based upon earned regulatory flexibility. Not granting it to everyone, not deregulation, which removes the regulatory requirement for everyone regardless of their performance, but to realize that based upon a risk-based analysis, some credit unions don't have the same regulatory requirements applied in the same way as others. And we need to allow them to earn greater empowerment. And I think that is putting in place a regulatory regime, if you will, that is adaptable to these changes that we know are going to come, even though we don't what all of them are.

Mr. Lawrence: How will you measure the success of an initiative like that?

Mr. Dollar: I think you measure the success of any initiative in the foreseeable future by the overall results of the industry. And if you regulate an industry, although we regulate individual credit unions, our responsibility is to them but also to the overall credit union industry. And through that, through the members, those 80 million members who put their hard-earned dollars in those credit unions, I think that if five years from now, ten years from now, we see stronger credit unions, we see more credit union members, we see credit unions who have a more diversified field of membership and therefore are safer and sounder and stronger, if we see credit unions that are offering more products and service to more members from all walks of life, then I think we will have been successful. One of the challenges when you're in an appointed position such as I and my colleagues on the Board are in is that we have a fixed term, six years as our term.

Many times, if you are really going to try to be visionary, you're going to put in place programs that you will not be able to measure the ultimate success of while you are there. But rather than just dealing with the problems of today and the challenges of today, and the opportunities of today, I think it is incumbent upon us to look at tomorrow and try to put in place things like "reg flex," "Access Across America," "AIM," that may not necessarily pay dividends today. "Access Across America," for example, those 33 million Americans that two years ago were not eligible to join a credit union that are now eligible, it will be ten years from now, 20 years from now before we know how many of them actually joined, whether or not they get a loan, will they start a small business, whether or not they break themselves away from the pawnshops and the check cashers and are able to bring about financial self-sufficiency, maybe homeownership because they have access to a credit union.

But I believe it is worthwhile in doing, even though the ultimate evaluation period will be down the line. That's what visionary leadership is all about. And this is one thing that contrasts a little bit to my days in elective office. The tendency in an elective office many times is to try to come up with some project that you can have your picture taken in front of for the brochure of your next re-election campaign. Immediate results are what pay political dividends.

But I think as fast as the marketplace is changing, as important it is for government to be responsive to those changes and that dynamic nature of that marketplace, we've got to be willing to say, you know, some of our projects may not show the payday over the next six months or even the next six years. But that does not mean that they are not worthwhile projects for us to get ourselves involved in.

Mr. Lawrence: Well, given your unique perspective and your service and your career in public service, I'm curious, what advice would you give to a young person considering a career in public service?

Mr. Dollar: Well, first is just not to discount it. So many times in today's society, the lure of the paycheck of the private sector, to be the next dot com millionaire, many times makes certain of our young people as they come out of college or go into their careers to discount public service.

The ability to impact lives, the ability to be able to make a difference in their community is a reward within itself. And I think the pay of public service has greatly improved in recent years. I think that is a trend that will continue. I think that trend must continue so that we can compete for the best and the brightest in the public sector. But I think there is an addition to that; the reward from making a difference, in making a positive difference. Well, I would hope that any young man or young woman coming out of college, beginning their career today, particularly in this area, when there are so many public service opportunities available to them, would at least not discount public service as a possible source of career. And then secondly, I think, to involve themselves in the community, to involve themselves in the decision making process, because it is important that those of us in the public sector be aware of public issues and community issues and the like.

And sometimes, young men and young women say, "How do I get started?" It may be as simple as getting involved in a community organization. It may as simple as getting involved in a chamber of commerce on a local basis. It may be as simple as participating in the combined federal campaign. But some way to be able to interact with those in the public sector that are always looking for talent; that are always looking for the next generation of the best and the brightest. And I think that you have to get that exposure before you able to have those opportunities.

Mr. Lawrence: That's a good stopping point, because Dennis, I'm afraid we're out of time. Debra and I want to thank you for being with us this morning.

Mr. Dollar: It's been a pleasure. And let me just close by saying that if any of your listeners would like additional information about credit unions or about the "Access Across America" initiative, they can contact our website, which is And we also have a special website for "Access Across America," which is

Mr. Lawrence: Great. Thank you very much. This has been The Business of Government Hour, featuring a conversation with Dennis Dollar, chairman of the National Credit Union Administration.

Be sure to visit us on the web at There, you can learn more about out programs and get a transcript of today's very interesting conversation. Once again, that's

This is Paul Lawrence. Thanks for listening.

Dennis Dollar interview
Dennis Dollar

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