156: Brian Knight of NASCUS on the Wisdom of Crowds, AI,Training & More

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Mark Treichel: Everyone, this
is Mark Treichel with another

episode of With Flying Colors.

Today I am here with a special
guest, Brian Knight, the president

of NASCS, the National Association
of State Credit Union Supervisors.

That's a mouthful, but NASCS is easier.

Brian, how you doing today?

Brian Knight: I'm doing well, Mark.

Thanks for having me on.

It's good to see you again, old friend.


Mark Treichel: good to see you.

It's been an interesting year and
federal charters, state charters

state regulators et cetera, et cetera.

So I'm really looking forward to chatting.

About what's happened at NASCS
and credit unions in 2023 and what

you see on the horizon for 2024.

We're recording this December 28th and
this episode will be live early January.

So yeah, let's so 2023, what's
your takeaway on 2023, Brian.

Brian Knight: 2023 was a busy year for
nasca, for the credit union system.

Obviously lots of big news
affecting the credit union system,

multiple big mergers of national
organizations and associations.

Were getting reconfigured,
N-C-U-A-N-C-U-A board, and there's a

lot of work going on at the state level.

As well, as I look back on 2023
for NASCS, obviously, we did

the things that we always do.

We filed dozens of rule
summaries and comment letters.

We provided reviews of multiple state
credit union acts for regulators for

some of our credit union stakeholder.

Members to take a look at where their act
compares to other states to NCOA where

it's going in the future We launched
new committees to really zero in on some

growing issues We launched a committee
focused on the special designations,

you know The minority depository
institutions the low income designated

the cdfis We have a new committee that is
looking at those Issues related to those

designations also helping to raise in
some cases state regulator awareness of

the importance of those designations, but
also helping focus on those designations.

So that committee has
met a couple of times.

We're very excited about that.

We have a new round table focused on anti
financial crimes heavily in the BSA AML.

Space, but, we have begun transitioning
our view of BSA and AML from a, I think

what's been historically in the credit
union space, a compliance focused view

of Bank Secrecy Act and anti money
laundering and NASCS has begun to look

at that really through the lens of anti
financial crimes, and I think in our view,

those folks who specialize In that area,
either at NCOA, at the state regulatory

agencies, at the credit unions, at the
leagues, they're not necessarily BSA

examiners or BSA compliance officers,
although that's the title they often hold.

What they really are anti
financial crimes professionals.

I mean, that whole area I think
has grown beyond compliance.

And so we've begun to, to pivot
our view of that portfolio through

the anti financial crimes lens.

And we've stood up a new round
table of those professionals.

Credit unions around the country.

They don't even have to be NASCS
members to, to gather on a regular basis

and talk about all of those issues.

Plus, I also think as we talk about 2024,
that obviously there's a renewed focus on

those issues on the financing of terrorism
on sanctions program, whether it's OFAC

or FinCEN, you look at the war in Ukraine,
you look at what's going on in Gaza.

And obviously from a foreign policy
perspective, there is a renewed emphasis.

On sanctions and those issues, but we
also see continued implementation of

the 2020 anti money laundering act.

So we'll talk about that again
as we look ahead of 2024.

So we've stood.

We've stood that up.

We're going to be launching
a new legal roundtable.

We're going to be pulling in the
general counsels from agencies.

Some of our regulators, we actually
have a bumper crop of the regulators

themselves who happen to be
attorneys, even if they're not the

general counsels for their agencies.

And of course, we've always worked very
closely with the general counsels from

many of our credit union members and
League and other stakeholder members.

So we're going to be pulling
together a round table.

We actually used to have 15 years
ago, and we just with workload

and capacity it, it went by.

That wasn't a priority for us, but
we're relaunching it because we've

had some conversations with folks
who'd like to talk with each other.

We've been running a series of free
webinars going back now, 3 or 4

years for all of our members on.

Kind of litigation in the financial
services sector, the class action

litigation, general litigation, the CFPB
and the SCOTUS and those kinds of issues.

And there's been such a great response
for it that we're going to stand up a

group who will meet probably quarterly to
just focus and talk about those issues.

Also in 2023, Mark, you remember
this when you were executive

director, obviously, a lot of what
we do is working with the national

exam committees meeting quarterly.

We have the, I call it new, but it dates
back now to 2018 pre pandemic world, the

joint supervisory working group, just
series of state regulators who sit with

senior staff and some on a quarterly
basis and talk about all of the issues

related to the shared supervisory mission
that and state regulators have for

the federally insured state charters.

We have monthly calls with
all of our state regulators.

Every other one of those calls, we invite
NCUA to participate and NCUA continues

to find value in joining that call.

So every other month, NCUA and
all the state regulators are on

the phone on a Thursday afternoon,
just talking about all of the.

Supervisory concerns issues
trends that they see out there.

Exciting news towards the back end of
2023 in November, the South Carolina

board of financial institutions achieved
its 1st and ask us accreditation.

So, congratulations.

to Commissioner of Banking Kathy Bickham.

I'm actually headed down to Columbia
in early February to present them

their big certificate and congratulate
them on achieving NASCS accreditation.

And then lots of training and education.

We probably put well over 2, 000
people through various NASCS events in

2023, whether they were our director's
colleges, our executive forums, our

big AFC training, our cyber security
training, our cannabis banking, and

that doesn't even include all the
training we do specifically for the

states, whether it is a state specific
training for their agency, or whether

it is sending state regulators to FFIC.

Classes are providing them other
scholarships so they can augment

their state training budget.

So busy, busy year in 2023.

But looking back, pleased with
NASCSIS performance, pleased with the

state of the state system in 2023.

I think a lot of challenges obviously
lie ahead in 2024, but I think as

we finish out the year and look at
January and beginning the next year,

I think we're in as good a shape as we
can expect to be to face and meet the

challenges that are that are coming.

Well, I get

Mark Treichel: tired just, just listening
to all those achievements for the year.

It's like, holy smokes.

Did you add, did you double staff

Brian Knight: too?

No we still do this with a staff of


Mark Treichel: Wow.

That's fantastic.

So a couple of the, the fraud, anti
financial crimes when I hear that in

my mind, I also go a little bit beyond
the anti money laundering and BSA side

of things and, and just with like AI,
there was a podcast I was listening

to where they were giving an example
of a, it was a New York Times reporter

who had a friend who had an account at
Bank of America and they tried to use,

someone tried to use his voice to get
his account and she was smart enough to

figure out that it wasn't him, but it
was an AI version of him and shut the

account down and It blew up a business
deal that he had because he was overseas

and he had actually stopped in and
said, Hey, I'm going out of the country.

I want you to know I'm going
to be doing some things.

And then unbeknownst to him, someone
else tried to steal his identity.

And then in talking with different
clients and, with that example and

different things, and they're talking
to me about all the different.

Softwares are outside vendors.

They have to try and mitigate
the fraud side of things.

You're kind of looking at
specifically tied to the BSA

and AML side on that committee.

But this is, I don't want to say I'm
scared where this is going, but when

I hear what's actually happening
out there it's a, it's a challenging

arena in the, in, in fraud right now.

Brian Knight: Yeah
you're absolutely right.

And while this roundtable itself to
start up is looking through the financial

crimes with respect to the sanctions
programs, you're absolutely right.

I mean, part of our pivot to look at this
through the anti financial crimes lens

is, I'll get to AI in a 2nd, but even.

Going at the base level cyber security.

Now, we began to recognize years
ago that the nexus between your

information security officer and
your cyber security concerns and your

traditional anti money laundering
concerns that nexus was growing.

And we began at our cyber security
conference to be giving the information

security examiners and officers a dose
of the anti money laundering security.

Curriculum and at our anti money
laundering conference, we're giving

them a dose of the cyber curriculum.

So you're absolutely right.

The anti financial crimes is bigger.

And when you then mix in the AI, it
is really challenging, whether it's

traditional cyber security the ransomware
and, clicking on a link versus the AI

it's just a never ending challenge.

It's interesting as we look at the
capability of artificial intelligence.


It actually reminds me of an early
debate in the cyber security realm going

back a couple years, and you probably
remember this from executive director.

We talk about either the multi factor
authentication, but there was a time

in there were biometric authentication
was, that's the greatest thing.

Nobody is going to be able to
compromise, marks, retina scan or

marks, fingerprint and everything else.

But even back then, there were
some experts who I remember

were like, be careful.

If your password is compromised,
you can change your password.

But if your fingerprint is
compromised, or your retinal scan

is compromised, or your voice is
compromised, how do you change that?

Or your face?

And so they said, be a little
careful because there is no

changing your biometrics.

Once it's compromised, you
can get a new password, you

know, every hour on the hour.

And I feel as though, the story you told
in that article that's on the New York

Times is That's where we are, right?

I mean, it's the, it's the AI now
compromising the one thing that, we

think, we believe our eyes and we
believe our ears and now you're not sure.

Mark Treichel: Right.

Yeah, exactly.


It's a, it's a lot, it's the
wild, wild West when you throw

that AI into the fraud side.

Brian Knight: And NASCS has been
doing a lot of talking about AI.

We've had speakers of various aspects
of AI, not just the cybersecurity.

There's the, what I'll call the
ethical compliance components of,

AI underwriting, just understanding.

What is AI today versus
what we think it is?

As I know you're aware, look, there's
a entire academic school that even

says it's a misnomer because it's
not actually intelligent, right?

I mean, you can, you can ask a language
model AI to write you an essay about,

the flying colors podcast, and it will
write a fabulous essay talking about how

wonderful this podcast is, which it is.

But let's be clear, it has no idea
what Flying Colors podcast is.

It doesn't know what those words mean.

It doesn't know who you
are or what a podcast is.

It just knows that when it looks,
through language learning, these

are all the things that people
say about it, complementary.

And so it's not actually intelligent.

And so I think understanding that and
appreciating that comes with, to your

point, a healthy dose of caution.

Now, it is still only
regurgitating and computing what

it is learning from society.

So for good or bad, it
will also incorporate those

things in its algorithms.

Mark Treichel: Well said, very well said.

Yeah, it's going to add, and
we're just seeing the beginning of

what that means and doesn't mean.

Yeah, that's, I see.

I see 2024 2025 and every year
beyond really kind of pushing the

envelope relative to that, but also
creating opportunities, but also

creating risks on the other side.

So, and the lead.

So the legal roundtable,
more and more credit unions.

The, there, there was the time when
there was CEOs and there were the vice

presidents of lending and the CFO, the
CEO, the CFO, the VPs and maybe they hired

out to get general counsels, but it's far
more common now, especially in the large

credit unions that they actually have.

A general counsel and where the world
is that they might not be in every

meeting that the CEOs in, but nearly all.

And then there are, when I was at N.




As executive director, there were
a lot of meetings where it's I need

to have the general counsel here.

So I don't need to repeat it.

And and they look at lens and not that
they're, they end up being like a co CEO,

but they the stature of that position over
the last 20, 15, 10, five years, and now.

It is making it what as critical a
position as there is in credit union.

So I think that's great
that you've got that.

You've got that committee
back up and running.

And I'm sure it's like the
wisdom of crowds and N.




seeking seeking the
advice of NASCS, right?

When you have a panel of CEOs,
they're going to focus on One

aspect and the attorneys look at
life through a different lens.

So they're going to point out some things.

Again, both opportunities and risks.

Have you seen that already in, in that

Brian Knight: committee?

Yeah, so we haven't stood the
legal committee back up, but in our

conversations and in the webinars
we've done on some of the legal

issues, you're absolutely right.

Look, the credit union system exists
within the broader fabric of the

financial services sector and increasingly
the financial services sector.

When we look at these issues from
AI to even now courts reconsidering

Chevron and what discretion agencies
have and these kinds of issues.

There is a larger drop of legal
issues that are, if not shaping the

financial services sector, certainly
exerting quite a bit of influence.

On it, and I think increasingly
from our regulatory agencies from N.




out to the system stakeholders
themselves understanding how those

legal challenges are playing out,
whether what rules from the C.




actually take effect as I noted to
Chevron and what that means for discretion

to interpretations of what is U.



To the various, class action
litigations and what constitutes,

notice, into the realm of cyber
security, what is negligence?

What constitutes a breach?

What constitutes a substantial incident
under NCOA versus a material incident

for the federal banking agencies?

All of these issues are playing out.

And certainly we saw during
COVID an entire whole legal HR

world come front and center.

That again is probably beyond
for those who have spent their

careers in financial services.

They understand compliance.

They understand the rules.

They understand a balance sheet.

And now all of a sudden
we're in a world of.

Can I require employees to be vaccinated?

Can I even ask them if
they are vaccinated?

All of these things coming front and front
and center, I think has just elevated

the importance of the legal realm.


Mark Treichel: Great point.

The couple other things you mentioned
is mergers, a big organization.

So we've got NAFCU and CUNA going away and
it's going to be America's credit unions.

That's I've had a couple of different
podcasts on that with John McKechnie

and Jeff Bassino, but and then
there was a PSCU is merging with

the name escapes me of who they're
merging with, but what was it?

Co op.

Co op.

That's right.

Thank you.


And so any general thoughts
relative to either one of those

that you want to chat about?

Brian Knight: It'll be interesting
to see the end results.

I think there are efficiencies
and benefits that the credit union

system is going to recognize.

All four of those entities involved in the
mergers, had top notch boards of directors

who, looked at these issues and considered
the benefits to be achieved by the system.

And I think from NASCS's perspective,
look, these are two major mergers.

And I think no matter what
corner of the credit union

space you happen to reside in.

There are going to be ripples out from it.

And so I think from Naska's perspective,
we're just waiting to see as

these things ripple out from this.

That is just such a major movement
of, four kind of mass centers

in the credit union space coming
together and just seeing what

the ripple outs are going to be.

And I think there's always
going to be unforeseen results.


Potentially good, potentially, maybe not,
not to just not anticipate and so waiting

to see what that is, but excited for
the future of the credit union system.

I think on the 1 hand,
it's exciting to note.

The credit system is still
alive and vibrant and still

will be willing to rethink.

How it's traditionally, done things
and willing to experiment and to make

changes and to adopt to the future, which
is, what NASCS has always stood for.

So on the one hand, exciting to
see doesn't directly impact us.

But again, it's going to affect everybody
in the credit union space because

those are just such four power centers.


Mark Treichel: it's going
to be interesting at GAC

and the big reveal there.

And I know they just announced a bunch
of the positions that they filled

and it looks like they've done well.

Positioning that, to start
off here real soon in 2024.

And so the change at the NCAA board.

So now we've got time Tanya Otsuka, who,
I don't know if she's been sworn in I

hadn't, I've taken a little bit of time
off here between Christmas and new years,

but I'm sure if if it hasn't happened,
it'll happen any day now and any thoughts

relative to that with now we'll have a.

Chairman Harper, the Democrat Chairman
Todd Harper has been in place, but he

hasn't had a second Democratic vote.

And I've had podcasts where I've
talked about what I think that means.

I think climate change.

I think consumer compliance.

I think he's going to dust off
the proposed rule on succession

planning, which may or may
not apply to state charters.

I think I have to go back and
see how that rule was proposed.

But any thoughts relative, as soon
as I said it, I thought I wrote

a blog post that it was just fed.

And I wrote a blog post that
said the top 10 reasons why they

shouldn't make it a regulation.

So I don't think it should become a reg.

I think it might though.

So any thoughts on where you, how you see
this impacting credit unions and or N.




and or state charters.

Brian Knight: I Mean, of course, you're
gonna have the fundamental dynamics of

the NCA board changing whenever you have
a party shift in, for all intents and

purposes, the power center of the board
from two Republicans to now two Democrats.

So it's going to change that.

Clearly, I'd be remiss if I
didn't start off by acknowledging,

board member hoods service.

He was fantastic to work with
for NASCS for the state system.

Always very accessible.

I thought his 2nd.

Time on the board in
particular, I think was a.

Success and so thank him for his service
and excited to see the new board.


Yes, no, it's coming with.

Experience and an understanding, I have
a fondness for the attorneys coming

with a with an in depth understanding
of the broader financial services

sector and in depth understanding of the
legal intricacies of financial services

and financial service regulation.

I think that's always a good thing.

I don't know what it means.

I think it's interesting
that now all three NCAA board

members are former Hill staff.

Maybe that means nothing other
than all three NCAA board

members are former Hill staff.

It's a definite trend.

Yeah, it's a definite definite trend.

But I do I think this nominee,
like all nominees obviously has the

experience to do it, but brings a
unique set of skills from her position

on the banking committee that I think
portends a great value for the credit

union, for the credit union system.

I would still like to see a former
state regulator on the NCRA board.

I know you're very familiar
with that, rant from NASCS.

But again, look our state regulators.

In a lot of cases have a very wide,
broad perspective in a lot of ways,

kind of akin to what she's bringing
from the banking committee, because

for most of our state regulators, they
don't just do credit unions, they do

credit unions, they do banks, they do
securities, they do, mortgage originators,

non depositories, money transmitters,
they bring that entire universe of the

broader financial services sector, as
well as an understanding of the innovation

that takes place at the state level.

So I would like To see that in the
future on the NCUA board, but excited

to see where the NCUA board is going.

With respect to the initiatives
that you checked, yes, I think

we'll see work on those in addition
to the succession planning, which

was federal credit unions only.

I would not be surprised to see
perhaps NCUA revisiting share

insurance reform, the statutory
structure of the share insurance Fund.

Certainly there is interest.

Obviously NCOA interest in third
party supervisory authority.

And hopefully this brings renewed efforts
to get what I think is probably most

critical for the credit union space.

And that is the CLF reform
to get re implemented.

The Covid era expansions of the CLF.

I think I would hope that would
be, among the top priorities.

I know NCA has been working
on that on Capitol Hill.

So not to say that they haven't been,
but perhaps with the connections

and the renewed vigorous that
she is bringing with her recent.

I think that's essential for the
future of the credit union system,

particularly the majority of the system
that are modestly sized and the role

that the corporates I know are prepared
to play, but can't because of the

kind of current limiting structure.

Mark Treichel: Great points.


And as far as the CLF and the
3rd party, I've always been

supportive of the CLF side of it.

I've gone, I want to say I've gone
back and forth on the 3rd party

But I was, one of the strategies.

That I was aware of when I was at it and
two ways you need to ask for it because

if something blows up, you need to say
I didn't have it and you don't want them

to be able to say you didn't even ask us.

You didn't tell us.

So there's that side of it.

And then there's the side of it.


Once you get it, is it.

What do you do with it?

Is it like that?

You got to be careful.

Not if they get it not to be the
dog chasing the ice cream truck.

Okay, now I got the iconic.

Now, what am I going to do?

And my concern always was if
we got it when I was there,

or if they get it now is.

How do you utilize resources?

How do you expand staff?

Do you expand staff?

When do you go in?

When don't you go in?

Who do you go in with?

And that's I don't want, Pandora's
box might not be the right word,

but that's what pops into my head.

And, there's always this
battle for resources.

The examiners don't feel they have enough.

The regions oftentimes
don't feel they have enough.

Now they're putting more resources
into consumer compliance.

And I have a disagreement with
Chairman Harper on the fact

that I don't think consumer
compliance is safety and soundness.

And I think they are, I think
those two things are mostly binary.

And so there's just, there's not
enough hours in the day, just like

you had a busy 2023, if they get
it, how are they going to handle it?

And I'm sure they will handle it because
they always rise to the occasion.

So I would.

And with this recent malware situation
where a lot of credit unions were

knocked down I've revisited my
thoughts and I think I'd rather catch

the ice cream truck than not at this

Brian Knight: juncture.

Yeah, and I understand all of
those concerns, and I know as

you're aware, NASCS is a little bit
unique in the credit union space.

We are not opposed to NCOA
having third party authority.

We've never been opposed to NCOA
having third party authority going

back to, I think, 2005, when then
chair Joanne Johnson actively

sought it before, before Congress.

Look, we've got 29 or so
state agencies that have some

form of 3rd party authority.

They use it sparingly.

They use it when needed.

They don't generally conduct.

Regular examinations, but when you
need that authority as a regulator,

as you need that authority.

And when something goes wrong and you
can't get the answers that you need to

protect the operations, the reputation
of the overall system, the deposits

of individual credit union members,
it's an invaluable authority to have.

And so while I understand.

There are concerns as to how NCOA
would wield that authority, and I won't

suggest that we don't have, some similar
concerns as to how to be wielded,

particularly ensuring that we don't
have redundant use of the authority in

those states where it is already there.

I think for a regulator,
it is a valuable authority.

If I were looking at a state credit
union act on behalf of an agency,

and they were asking NASCS for
suggestions, and I saw that they did

not have that authority, it would be
1 of the things that I would suggest.

And then.

The other big issue, I think, for
the credit union system is, look,

there is also a disadvantage to
the overall credit union system

for NCOA not having that authority.

And that is that NCOA doesn't have access.

To those reviews of third party
vendors done by their sister banking

agencies and what you know, and what
I know is that when a federal banking

agency reviews a critical third party
vendor, it will send a report of that

review to that vendors bank clients.

And so you could have a credit union and
a bank using the same non QSO vendor.

On a Thursday afternoon, and the CEO
of the community bank is sitting at her

desk, and she gets a report from the
FDIC or the OCC if it's a national bank.

About the status of that vendor,
the credit union CEO sitting at her

desk across the street, nothing.

It's Thursday and that's it.

That's a blind side
for some in the system.

And quite frankly, we've seen that play
out at the state level where we've had

states who have gone in because of.

Concerns that were raised during their
examination of a state charter credit

union could not get the answers they
needed and went through the, beyond the

credit union to the vendor, because they
had direct authority to do that, and

they would notify if there were federal
credit unions who use this vendor, they

would notify some of the other states.

But at the end of the day, that
state exam in many cases could not be

shared with the federal credit unions.

And she was given a heads up
as to what the state found.


But the state would send out its exam
report out to its state charted credit

unions being like, are you aware?

And Brian, vendor, this is what we found.

You need to fix this or have it fixed
or be on alert or find a new vendor.

And the Federals were generally clueless.

And so I do think there is an
information gap that is concerning

for the credit union space.

But again, that's not to discount
those concerns that you rattled off.

I'm aware of those share some
of them, but I just think that.


The supervisory value of this
authority when wielded appropriately

to me for NASCS outweighs those

Mark Treichel: concerns.


Very well said.

And I think, yeah, you're right.

It's time.

It's time for insulating.

Have that authority back at
sunset back with Y two K.

And I think it'll be they've been
beating the drum for forever.

But I think Chairman Harper, And maybe
having, a board member that another

board member, tied to the Hill.

Maybe that's something that
they can get done together.

So I'm hopeful that they
can, I think it's time.

And yeah.

So very well stated.

All right.

So 2024, Brian what what's happening
starting next week what's on the agenda

for NASCS and state chartered credit.

Brian Knight: A ton.

You and I have already talked on some
of the big issues that'll be coming, the

NCAA board, those initiatives, looking at
artificial intelligence, looking at anti

financial crimes, whether that's the money
laundering space, the cyber space, oh,

and the big one kind of related to all of
that, particularly when we look at cyber

security, which then quickly takes you
into the realm of privacy, open banking.

What is open banking going
to look like when it gets

implemented in the United States?

And I believe it is a when not
an if, but, open banking can mean

a couple of different things.

It can mean the right to port your data at
a very basic level to a right to have any

API of your choosing be able to interact.

With your financial institution
at your demand to manipulate your

data and everything in between.

And what does that mean?

Where does the cybersecurity
responsibility lie?

Where does the implementation costs lie?

Who decides what the standard of data?

Data is I know the CFPB has an
initial proposal out there, but

we've NASCS has been looking at open
banking as it first arose in the EU.

We've talked to some countries.

We're talking with the credit unit
system in Australia that has gone

through it to try to put our arms around.

What are the things we need to
be thinking about as open banking

comes to the US when it comes?

I don't think it's something that's
going to be implemented, obviously,

by the regulators, state or federal.

This is going to come from
a different policy center.


Which is concerning because the impact
is going to fall on our depository

institutions where, or the states or the
prudential regulators, but at a minimum,

we need to be prepared for this debate.

Understand the nuances for this debate.

Prepare the system to be able
to weigh in as it gets shaped

because I am not convinced.

The final form of open banking as
it will be implemented in the U.


has been decided upon.

And so I think there's an opportunity to
try to get in there and try to get answers

or at least a robust policy discussion
around all of these intricate issues.

So I see that as tied to the
artificial intelligence and the A.



debate because I think privacy security
all of that is wrapped into that.

So I think that'll be Yeah.

A big, big issue.

Another issue is, Naska says, I noted
that we've been reviewing some state acts

upon request of some of our members is
just understanding what will and should

the credit union system of the future
look like, you and I talked last year

and we, you and I both talked about how.

The broader financial services sector is
undergoing transformational change, right?

Old traditions of the roles of a
depository institution versus a

non depository institution versus
who can access the payment rails,

who can hold people's money, all of
these things are being challenged

and debated and shifting around.

And the credit union system is
going to have to find its place.

In the reshaped financial services
sector, which isn't just a U.


financial services sector.

It's a global financial services sector.

And so we're going to have to find our
place and think about what do we need

to do to ensure that our role, but
more importantly, our ability to remain

relevant to credit union members from a
regulatory agency perspective to ensure

that we understand what's The trends
and innovation that is needed versus

the safety and soundness risk and make
sure that we maintain robust supervision

while not stifling the innovation needed
for credit unions to remain relevant.

And so I think all of that in 2024 will
continue to percolate just underneath

the surface, which is going to require a
lot of kind of dedication to training to

thought leadership to issue spotting on
some of the things that we talked about.

And of course, for our state agencies.


This all takes place against
the backdrop of day in and day

out conducting examinations.

One of the, one of the comments John
Koloff and our staff who testified at

the NCOA budget hearing, noted is the
just tremendous amount of work done

by state regulatory agencies and state
sharded credit unions and the amount of

money that state sharded credit unions
pay to To support that work, the state

charter credit unions reported paying
over 94 million dollars to the state

agencies to be state charter credit
unions compared with 109 million that

the federal credit unions pay to NCOA
and the state charters are only 39

percent of the number of credit unions.

But you know, our state
agencies conducted.

Over 440, 000 examination hours
generated over 1, 500 reports, and

that's 46 agencies covering 2, 000
credit unions and, 68 million members

and over half the assets in the system.

While all of that day in and day out work
that you are well aware of that folks

don't kind of see when they think about
NCA or they think about the state agency,

they tend to think about the regulatory
burden level and not the day in and day

out work that's being done to safeguard.

Deposits and the members of the
system and by the way, safeguard

credit unions from their sisters and
brother credit unions who might not

be as diligent as they are right in a
cooperative in a cooperative system.

And while conducting all of that,
also staying abreast of all of

the changes and trends is just
going to be a busy year in 2024.

I would be remiss if I didn't note.

We're also gearing up.

I talked about our busy 2023 schedule
and then we'll have the same.

Full robust schedule events in 2024.

We're bringing all the state
regulators together and I think.

I presume NCOA will join us as they do
every year for a regulator only meeting.

That'll be in late March in Chicago.

Our annual meeting of NASCAS, we call
it the State Systems Summit, but our

big annual meeting will take place in
October, October 20th through 23rd in

Colorado Springs, Colorado, a little
bit later in the year, but that's

the perfect time to head up into the
foothills of the Rockies at the Broadmoor.

So we're very excited about that.

Again, that'll bring state and federal
credit unions, all the leagues,

NCOA, the state regulators together.

Take care.

And then on top of that, we'll continue
our member webinars will continue

our directors colleges are training.

We have a whole slate of classes.

We're putting out to the state regulators
to attend and ask us is expense.

So, just continuing the work that
we always do mark to ensure that

the state system and the overall
credit unit system is ready to

meet the challenges of tomorrow.

Mark Treichel: It's good.

The dual chartering system is important.

It allows for the incubator of ideas
and Nazca's and state charter credit

unions are fortunate to have you at
the helm of their trade association

to help move that ball forward.

And again, back to the wisdom
of crowds that Nazca Springs to

light many issues that help N.




And help Credit unions help state
charters help federal charters.

By the way, if someone wants to I want to
if someone wants to join ask us a state

charter can join, you have that separate,
we didn't get into that, but you have

the state, you have two boards, right?

You have the board.

Of the state regulators and you
have a board of credit unions.

If someone wants to help support
your organization by joining,

how do they go about do that?

And what does that mean for them?

Brian Knight: Great.

Thank you for that opportunity.

And I was actually going to circle
back to that because you've mentioned

a couple of times the wisdom of
crowds, which is what NASCS stands for.

But, with respect to joining NASCS, look,
any credit union system stakeholder.

Is welcome to become a part of NASCS.

We have state chartered credit unions
that are members, predominantly our

membership of state charter credit unions.

I've got about half a dozen
federal credit unions.

Some of the larger federal credit
unions and modestly sized federal

credit unions are members of NASCS.

Leagues are members of NASCS.

The corporate credit unions
are members of NASCS.

About 18 other system stakeholders.

If you're a credit union system
stakeholder, generally speaking, you

are welcome to be a part of NASCS.

We do have two governing bodies.

We have a regulator board of
directors, but we have a credit

union advisory council as well.

That advisory council represents
what we call our stakeholder side of

our membership, the credit unions,
the leagues, the other system

stakeholders, but our board and our
advisory council always meet together,

talk about the issues together.

And to your point, I think that's why.


NASCS has been so successful in
these, nearly 60 years that we've

been doing this since 1960, 65
is it is the wisdom of crowds.

It was a regulators only
association until the late 1980s.

In the late 1980s, early 1990s, the
regulators invited the credit union system

into the organization to your very point.

They're like, look, for the past 30
years, give or take, we've been very

successful in talking among ourselves.

About the issues that we see and debating
what should be the supervisory response.

We have a blind spot.

We ourselves don't run credit
unions or banks for that matter.

And sometimes what sounds good to us
doesn't work the way we thought it

would when it's being implemented.

So they did for that kind of wisdom
of the crowd, they opened NASCS to

the system stakeholders to be like,
let's talk about these issues together.

We can tell you our perspectives
as regulators, not just of credit

unions, but in many cases of the
broader financial services sector.

Here are the things we have seen gone
wrong in the past with this versus

the, innovation and the operational
expertise of the credit unions and the

credit union supporters, the leagues
who are serving the members as every day

as they come in and meet their needs.

So it is that wisdom of crowds.

Anybody interested in joining
NASCIS, you can go to our website,

click on join the conversation.

It'll show you the different categories.

If you join NASCS, you become
part of our conversation.

You are welcome to serve
on most of our committees.

We do have part of our shop.

We are still at our core that
regulators professional association.

We were formed as a 1965.

so there is a part of our work that is
closed off from the system stakeholders.

A lot of that work with NCUA
behind the scenes on those things.

Obviously, that's confidential.

That doesn't it.

Get transferred over to our system
side, but on our broader system side

of our membership, whether it's our L
and R committee, this legal committee,

I was talking about the special
designations committees, working

groups, issue, spotting the education,
the training, the discussion of.

Of policy, probably 1 of the most
popular committees in is our legislative

and regulatory affairs committee.

It meets the 1st,
Wednesday of every month.

It's got about 80 folks on there
from agencies from credit unions

from leagues from others and.

1st, Wednesday of every month in
the afternoon, they get together

and they begin hashing out, these
various issues, whether it is somebody

asking a state specific issue.

Hey, we don't we're not allowed to do this
in our state, or we don't allow this in

our state who has a different view versus.

Discussions of AI and NCUA proposed rules
or CFPB proposed rules or FinCEN or OFAC

issues, but it is that wisdom of crowds.

Thanks for asking, but go to the NASCSIS
website and you can click on join

the conversation and see how to join.

Mark Treichel: Fantastic.

And Brian, as we wrap up here, is there
any question I should have asked you today

that I did not, that you want to highlight

Brian Knight: here?

No, I think, as, as always, I think you
and I have spent a lot of time talking

about these issues over the years.

I think we've covered a
lot of the big, big issues.

I appreciate what you do both
with this podcast and with, the

consulting you do in the credit union.

Space and, I'll tell your listeners.

Sometimes I have NCOA questions.

I need a different perspective.

I think I called you up
on just about a year ago.

I called you up.

I was like, okay, Mark, once again,
let's go through this NCOA budget.

Let's debate OTR.

Explain it to me.

What am I missing here
from your perspective?


Mark Treichel: where are they hiding?

Where are they hiding the bodies?

Brian Knight: I appreciate you and what
you do appreciate this conversation,

this opportunity to talk to your
listeners about NASCS and what they do.

Mark Treichel: Fantastic.

Brian has always enjoyed our chat and I
want to thank you for your time today.

Brian Knight: Thank you.

Happy holidays to you, Mark.

I hope you have a happy and successful
2024, and I'm sure I'll be seeing

you down the line somewhere.

Mark Treichel: Likewise.

Sounds good.

And listeners, I want to
thank you for listening.

I hope you listen again soon.

This is Mark Trenkle signing
off with flying colors.

156: Brian Knight of NASCUS on the Wisdom of Crowds, AI,Training & More
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