NCUA's Harper Updates House Committee on CU Strength

As former senior managers at Signature Bank and Silicon Valley Bank were being grilled by the Senate Banking Committee about the failures of their banks, regulatory leaders from the financial industry were similarly being questioned during a House Committee hearing.

On Tuesday, members of the U.S. House Financial Services Committee spent nearly five hours asking questions of financial regulators, after three regional banks collapsed so far this year.

NCUA Board Chairman Todd Harper, along with heads of the Federal Reserve, FDIC and the Office of the Comptroller of the Currency, sat in front of the committee for questions about the strength and health of their financial sectors as other regional banks are under economic pressures and many fear more bank failures in the future.

While Vice Chairman for Supervision, Board of Governors of the Federal Reserve System Michael Barr received a vast majority of the questions from lawmakers, Harper’s focus remained on highlighting the health of the credit union system.

“Overall, the performance of federally insured credit unions remains stable. Total loans, assets, insured shares and deposits all increased last year. The system’s aggregate net worth ratio also rose to 10.75 %, representing a recovery of 73 basis points from its pandemic low,” Harper said.

He continued, “What’s more, 91% of total share deposits within the system are insured. That has contributed to stability within the credit union sector in recent months.

“The NCUA’s Share Insurance Fund also continues to perform well. Although the fund’s equity ratio is three basis points below the desired operating level, no premiums are expected at this time.

“That’s because the system is currently well positioned to handle any dislocation resulting from a moderate recession,” Harper said.

Ahead of Tuesday’s hearing, NAFCU Vice President of Legislative Affairs Brad Thaler filed a letter with House Committee members asking them to better understand the difference between banks and credit unions.

Thaler wrote, “Credit unions have not seen runs on their deposits like some banks because of the relationship they have with their members – who know their money is safe at their credit union. That is the credit union difference. Our industry prioritizes members’ financial well-being over profits. Credit unions do not make risky investments that could undermine their institution or harm their members; they invest in the programs and products that strengthen them.”

Harper is scheduled to testify in front of the Senate Banking Committee on Thursday with a similar panel of witnesses from the financial regulatory agencies.