NCUA Chairman Rodney Hood during a virtual Senate Banking Committee hearing.
With a container of disinfecting wipes placed behind him, Senate Banking Committee majority member Sen. Mike Crapo (R-Idaho) began a virtual hearing on Tuesday to hear live-streamed testimony from financial regulatory leaders to gain insight on the economic crisis caused by the coronavirus.
Other than the occasional statement of, "Can others hear Chairman McWilliams?" and "You got your mute button on," the meeting was much less contentious than a typical in-person meeting in chambers.
Along with officials from the Federal Reserve, the Office of the Comptroller and Currency and the FDIC, NCUA Chairman Rodney Hood virtually faced committee members to offer an economic assessment of credit union industry.
"The agency is now assessing emerging risks, including the likelihood of elevated liquidity and credit risk, and the risk exposure to individual credit unions, the system as a whole and the Share Insurance Fund," Hood said.
According to the NCUA, as of Dec. 31, 2019 the Share Insurance Fund's calculated equity ratio was 1.35%. This equity ratio was calculated on an insured share base of $1.2 trillion.
Hood's testimony particularly focused on the issues of credit union liquidity and capital.
"This pandemic is affecting virtually everyone, and the country now faces the specter of an emerging liquidity event that could have widespread and difficult-to-forecast implications," he said. "The increased flexibility and borrowing authority for the NCUA's Central Liquidity Fund will make it easier for member credit unions to access the CLF if and when they need to."
Hood recommended to the committee several statutory changes to help improve liquidity for credit unions:
- Make the Central Liquidity Facility permanent.
- Grant temporary authority to waive lending limits between federally-chartered credit unions.
- Reduce the level at which credit unions are considered well-capitalized, from a net worth of 7% to 6%.
- Raise the Member Business Lending cap to 20%.
- Permanently increase the federal credit union loan maturity limit from 15 years to 30 years.
- Permanently expand credit union reach for underserved areas.
According to a statement released by NAFCU's Vice President of Legislative Affairs, Brad Thaler, he asked for more legislative relief for credit unions "from the current expected credit loss standard, more funding for the Community Development Financial Institutions Fund and Community Development Revolving Loan Fund, and modernizing outdated governance provisions in the Federal Credit Union Act."
CUNA President/CEO Jim Nussle wrote in a statement, "Uncertainty has been pervasive since the outset of the COVID-19 pandemic and continues to be one of the greatest challenges facing us now. It is impossible to forecast precisely the duration of the crisis or the depth of its economic and financial impact. For credit unions that need to remain open to serve all their members, and in a position to help those in need, the uncertainty factors into every decision they make."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
