NCUA Chairman Todd M. Harper’s Remarks at the 2024 Diversity, Equity, & Inclusion Summit

As Prepared for Delivery on July 10, 2024

Good morning, everyone.

Thank you for participating in the NCUA’s fifth Diversity, Equity, and Inclusion Summit. There’s no place that I’d rather be today than with you in Minnesota, but I am alas still recovering from recent back surgery.

Nevertheless, I’m certain this year’s summit will be a big success. That’s because we have the hardworking members of the NCUA team, who planned and executed this summit, and all of you who came together in Minneapolis to thank for that.

Economic Freedom and the Shrinking Middle Class

Last Thursday, our nation turned 248 years old. The Fourth of July holiday is an annual commemoration of the liberties we cherish as Americans. It’s also a yearly reminder of our collective responsibility to uphold and nurture the democracy that guarantees our freedoms.

In our democracy, everyone has a part to play in achieving that goal, including—and especially—credit unions. So, what role does the system of cooperative credit hold in promoting democracy? Well, former First Lady Eleanor Roosevelt perhaps put it best, in a 1948 speech before United Nations delegates, when she said quote, “[A] society in which there is widespread economic insecurity can turn freedom into a barren and vapid right[.]”¹ Her call for an equitable economy as a foundation for true liberty still resonates today.

While we live in a strong and thriving country with a resilient economy, one issue of great concern is our shrinking middle class, which has contracted considerably over the last 50 years.² In 1971, more than six in ten Americans lived in the middle class. By 2021, that statistic had fallen to just five in ten Americans. What’s more, the percentage of lower income households increased during that same timeframe. That change in individual economic circumstances has produced real ramifications for our government of the people, by the people, and for the people. Over the last two-plus decades, the topic of economic security’s impact on the health of our democracy has been long discussed.

In fact, during our democracy’s infancy, Alexis de Tocqueville, the astute French diplomat and political scientist, wrote frequently about the importance of a vibrant middle class in bolstering Americans’ ability to work together toward a common cause. Recent research builds on Tocqueville’s argument and has reinforced the correlation between the health of the middle class, and the prospects for a strong democracy. For example, researchers at Northwestern University’s Kellogg School of Management found that the size of the middle class is a significant predictor of a democracy’s stability.³

The Fallout of Economic Insecurity

What’s more, the shrinking middle class has tipped the scales of the nation’s aggregate income in favor of upper-income households further exacerbating America’s income gap problem.⁴ And, even though wealth gains have been made by some in the last few years, the income gap in America has unfortunately only widened.⁵

As a result, the people pushed down the rungs of the economic ladder — regardless of their demographic status — are worse off and, as a whole, often discouraged about their circumstances. That resentment, in turn, has manifested itself in our present political discourse. There’s an undeniable tone of frustration in our national conversation that has led to distrust and propagated an “us versus them” mentality. Further, that sentiment has threatened the likelihood of finding common ground and adopting policies that lift up all Americans. That result should cause us all to pause and think about what we need to do differently going forward.

And, that’s where credit unions can make a real difference. Credit unions, in fact, have both a statutory responsibility and a moral obligation to facilitate the economic mobility needed for effective democratic governance. By following their statutory mandate of meeting the credit and savings needs of their members, especially those of modest means, credit unions can establish a firmer foundation on which financial stability for a growing middle class and a stronger national union can be built for future generations. And, in achieving that important mission, credit unions will help all Americans, regardless of the color of their skin, sex, age, religion, disability, or orientation, climb the economic ladder and strengthen our democracy.

Agency DEI Efforts

The NCUA is also fulfilling its statutory mandates to build a stronger economy and advance diversity, equity, and inclusion, with our Office of Minority and Women Inclusion and our Minority Depository Institution Preservation Program, among other initiatives. It’s why we customized examinations for minority depository institution credit unions. It’s why we have enhanced our fair lending supervision. It’s why we administer a grant initiative to assist credit unions in closing the racial wealth gap. It’s why we are working to root out racial bias in residential home appraisals and automated valuations. It’s why we are navigating rural credit unions through field of membership changes. And, it’s why we increased industry transparency, accountability, and market awareness by requiring federally insured credit unions with more than $1 billion in assets to disclose, separately, on call reports the income received from overdraft and non-sufficient funds fees.

We have made good strides as an agency, but there is still much work to do, both by the NCUA and by credit unions. Indeed, the parts we play should be played to the fullest, just as orchestras and bands played the Star-Spangled Banner on Independence Day last week.

Higher Stakes

That’s why the theme for this year’s summit is Diversity, Equity, and Inclusion: Here to Stay, and the dedication and passion of DEI professionals and allies like all of you are a testament to its durability. Yet, the misrepresentation of what DEI is, and what it is not, has persisted.⁶ And, what DEI is not, is elevating one person or group at the expense of degrading another. Which begs the question, what more can we do to educate and convince those who misunderstand DEI’s purpose?

One way is to persuade them of both the depth of DEI’s impact and the breadth of its influence. The business case for diversity, equity, and inclusion is well-known by now. It improves an organization’s performance, reputation, and bottom line. It also boosts employee recruitment, productivity, innovation, engagement, and retention.⁷

In speeches, I also often reference credit unions’ statutory mission to advance their members’ financial well-being. But, what’s sometimes lost in the conversation is their important role in supporting the physical and emotional wellness of the members they serve. After all, someone experiencing financial stress is more likely to experience health issues like heart disease and diabetes and mental health issues like anxiety and depression.^{8, 9}

Thus, more than 140 million members depend on their financial institution of choice to improve their quality of life — financially, physically, and emotionally. That means the credit union system has a responsibility to its members beyond protecting their hard-earned savings, and that is ensuring the industry supports the overall welfare of members from every background and demographic, through good times and bad. It does not matter whether someone is Black, brown, white, or from some other spectrum of the racial rainbow, nor what ethnicity, disability, orientation, religion, or gender one identifies with. Credit unions should work to lift up everyone, so our democracy can remain strong and succeed for the next two-and-a-half centuries. In doing so, the system of cooperative credit will remain faithful to its bedrock principle of “people helping people.”

Closing

Ultimately, credit unions give members, especially those of modest means, the vehicle and the fuel to become and remain financially secure. If done correctly, diversity, equity, and inclusion initiatives can and will narrow the income gap, support a robust and growing middle class, advance equity, and make our democracy stronger and more resilient.

Turning back to that French philosopher who I mentioned earlier, de Tocqueville once noted quote, “[w]hat is most important for democracy is not that great fortunes should not exist, but that great fortunes should not remain in the same hands.” The interdependence of financial freedom and a vibrant democracy is an opportunity for the credit union system to be a catalyst for greater stability and positive change. Diversity, equity, and inclusion is a cornerstone on which to build and achieve that stability and change. That’s why DEI is here to stay.

It is, therefore, incumbent on all credit unions and each of you here, as guarantors of financial inclusion, to answer the call for a financial system that works for all. And, that’s what we’re going to discuss in the many panels, presentations, and speeches that follow, how diversity, equity, and inclusion efforts can build a brighter financial future for all Americans. And, just as my recent surgery has strengthened my spine with titanium, you can rest assured that it has also strengthened my resolve to achieve those important societal goals. That’s why the NCUA—and you—should continue striving to advance diversity, equity, and inclusion.

So, thank you again for participating in this year’s summit. Please enjoy the rest of the sessions today and tomorrow. Listen, learn, network, and grow.

Please also be safe, well, and kind in all that you do. I hope to see all of you in person sometime soon. Thank you.