Samantha: Hello, this is Samantha Shares.
This episode covers N C U A Chairman Todd Harper's Written Testimony Before
the House Financial Services Committee
The following is an audio version of that testimony.
This podcast is educational and is not legal advice.
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And now the testimony.
N C U A Chairman Todd Harper's Written Testimony Before the
House Financial Services Committee
Chairman McHenry, Ranking Member Waters, and members of the committee,
thank you for the invitation to discuss the operations, programs, and
initiatives of the National Credit Union Administration (N C U A).
In todayâs testimony, I will discuss the current state of the credit
union system; the agencyâs efforts to maintain its safety and soundness,
protect the consumers who use credit unions, advance economic opportunity;
the N C U Aâs response to Hurricanes Helene and Milton; and several of
the N C U Aâs legislative requests.
State of the Credit Union System
Overall, the credit union system remains strong, although there are some warning
signs of potential weaknesses that the N C U A is closely monitoring.
Namely, the agency is seeing growing signs of weak loan performance, declining
capital levels, rising delinquency rates, and lower earnings across the
system and at specific institutions.
Credit Union System Performance
As of June 30, 2024, federally insured credit unionsâ aggregate net worth
ratio was 10.84 percent, an increase of 22 basis points over the year.
Year-over-year growth in assets and lending continued,
albeit at a slower pace.
For the first time since 2008, quarter-to-quarter asset growth was
negative; however, the total assets of the credit union system nearly reached 2.3
trillion dollars, while total outstanding loans exceeded 1.6 trillion dollars.
Year-over-year share growth remains positive, even after
negative quarter-to-quarter share growth in June 2024.
Like negative asset growth, declining total shares were last seen during 2008.
The industryâs return on average assets has slowed compared to one year earlier
but remains sound at 0.69 percent.
The net interest margin has also increased to near the levels prior to
the most recent rise in interest rates.
Credit loss reserving expense has increased given relatively high and
rising loan delinquency and charge-offs.
Consumer financial stress continues to flow through credit
unionsâ loan performance data.
The delinquency rate for total loans and leases rose to 0.84 percent in the
second quarter of 2024, nearing the level last observed in December 2014.
Meanwhile, the rolling 12- month net charge-off rate climbed to 0.79
percent, marking the highest rate since mid- 2012, when consumers were
recovering from the Great Recession.
Despite the deterioration in loan performance and earnings, net worth
levels indicate the credit union system generally remains resilient and liquidity
appears to have stabilized during 2024.
We, however, continue to see the effects of consumer financial stress
across the system and at specific institutions as demonstrated in the
industryâs overall CAMELS composite
ratings.
Approximately one in five federally insured credit unions has a composite
CAMELS code rating of 3, 4, or 5.
Especially concerning is the increasing number of complex credit unions with 500
million dollars or more in assets falling into the troubled categoryâCAMELS code 4
or 5 ratingsâduring the second quarter.
The number of troubled complex credit unions, those with 500 million
dollars or more in assets, tripled in the second quarter of 2024 alone,
and the amount of assets at these institutions grew by more than fivefold.
At the end of the second quarter, CAMELS code 3, 4, and 5 credit unions held
10.01 percent of the industryâs assets.
It has been nearly a decade since the N C U A last experienced this
proportion of insured shares at risk.
The decline in CAMELS ratings is a contributing factor to the increase
in the reserves held in the Share Insurance Fund, which increased nearly
14 percent from 209 million dollars at the start of 2024 to 231.7 million
dollars at the end of the third quarter.
External Factors Affecting the Credit Union System
The current economic environment has posed continuing challenges for some
consumers and many credit unions.
Although inflation has retreated, the general price level is
higher than a few years ago.
Higher prices, along with elevated interest rates, have
strained household budgets.
Loan performance has accordingly weakened.
Interest rates have also started to decrease and are expected to
decline further in the year ahead.
In the near term, however, the elevated interest rate environment
may deteriorate loan performance further as adjustable-rate loans
reprice at higher interest rates.
Further, the resumption of reporting delinquent federal student loans
to credit bureaus will likely lower credit scores for many borrowers.
These loans were not reported between September 30, 2023,
and September 30, 2024.
Likewise, commercial real estate lending, particularly within the
office sector, continues to show signs of stress because of the
prevalence of hybrid work environments.
While the credit union system has modest exposure to commercial real estate, the
N C U A continues to monitor twenty-six individual credit unions with material
exposure to this type of lending.
Share Insurance Fund Performance
Backed by the full faith and credit of the United States, the National Credit
Union Share Insurance Fund provides insurance coverage for individual accounts
up to 250,000 dollars at federally insured credit unions.2 As of June 30,
2024, the Share Insurance Fund insured
1.76 trillion dollars in shares and deposits and 91.2 percent of
total shares and deposits in the
credit union system.
In comparison, uninsured shares and deposits equaled nearly 169.4 billion
dollars, or 8.8 percent of total shares and deposits, as of June 30, 2024.
The Share Insurance Fund continues to perform well, with
no premiums expected at this time.
As of June 30, 2024, the Share Insurance Fund reported a year-to-date net income of
154.3 million dollars, a net position of 21.3 billion dollars, and an
equity ratio of 1.28 percent, which is
below the 1.33 percent normal operating level set by the N C U A Board.3 Because
of the stress in the credit union system resulting from liquidity and
interest rate risks, the N C U A has increased the Share Insurance Fundâs
liquidity position in recent years.
As of June 30, 2024, the Share Insurance Fundâs overnight investment
balance was 5.7 billion dollars.
The N C U A Board will continue to closely monitor credit union and Share
Insurance Fund performance and make needed adjustments to further consumer
confidence within the credit union system.
State of the Central Liquidity Facility
A credit unionâs ability to effectively deal with liquidity risk in all economic
environments, especially during times of systemic stress and reduced liquidity,
underscores the importance of the N C U Aâs Central Liquidity Facility
(CLF) to individual credit unions and the broader credit union system.
The CLF currently has 431 credit union members of varying asset sizes,
representing 9.3 percent of all institutions within the credit union
system.4 These credit unions have access to approximately 21.7 billion
dollars in contingent liquidity funding from this federally backed
source.
Under the N C U Aâs regulations, credit unions with assets of 250
million dollars or more are required to have access to a contingent federal
liquidity sourceâthe CLF, the Federal Reserveâs Discount Window, or bothâas
part of their contingency funding plan.
Credit unions with less than 250 million dollars in assets, while not required
to have a membership with a contingent federal liquidity source, must identify
external sources as part of their policies or contingency funding plans.
In December 2022, the CLFâs temporary statutory enhancements that facilitated
the agent membership of corporate credit unionsâcredit unions providing
payment and other financial services to consumer credit unionsâexpired.5 At
that time 3,323 consumer credit unions with less than 250 million dollars in
assets, or approximately 67 percent of all credit unions, lost access to
approximately 27.5 billion dollars in contingent liquidity through the CLF.
To address this issue, the N C U A Board has repeatedly and unanimously
asked Congress for permanent statutory authority to allow corporate credit
unions and other agent members of the CLF to purchase capital stock for a
subset of the credit unions they serve.
These statutory adjustments will make the CLF a more affordable
option for corporate credit unions to subscribe to the CLF on behalf of
their smaller credit union members while also providing greater access
to liquidity for more credit unions.
The Congressional Budget Oice has scored the CLF reforms
at no cost to the taxpayer.6
Eforts to Protect and Strengthen the Credit Union System
The N C U A over the last year has worked to enhance cybersecurity, promote
the prudent adoption of new financial technologies, enforce consumer financial
protection laws and regulations, support minority depository institutions,
advance diversity within the agency and industry, and strengthen the
resiliency of the credit union system.
Enhancing Cybersecurity
Overall, 442 credit unions with more than 1 billion dollars in assets
hold 77.2 percent of industry assets.
As a result of this concentration, a cybersecurity vulnerability at a large
credit union may threaten the safety and soundness of the entire system.
Moreover, cybersecurity threats within the interconnected financial services industry
remain high and show no signs of abating.
The N C U A, therefore, is fully committed to enhancing its cybersecurity examination
program and related activities.
Last year, the N C U A deployed its updated, scalable, and
risk-focused Information Security Examination (ISE) procedures.
The ISE examination provides examiners with standardized review steps to
facilitate data collection and analysis.
The N C U A also continues to expand its partnerships with the Cybersecurity
and Infrastructure Security Agency and the Federal Bureau of Investigation to
support credit unions, especially as the number of ransomware incidents increase.
In addition, the N C U Aâs cyber incident reporting rule that went into effect on
September 1, 2023, requires a federally insured credit union to report a cyber
incident to the agency as soon as possible but no later than 72 hours after
the credit union reasonably believes a reportable cyber incident has occurred.
The N C U A uses this information to understand potential cyber
threats to the credit union system and to provide recommendations to
protect credit union and member information.7 After one year, the
N C U A has received more than 1,000 reportable cyber incidents.
The data also shows that 7 out of 10 reportable cyber incidents are
related to credit union vendors, further underscoring the need for
Congress to reinstate the N C U Aâs third-party vendor examination authority,
which is further discussed below.
The N C U A also provides credit unions the Automated Cybersecurity
Evaluation Toolbox (A C E T).
This tool allows credit unions of all asset sizes to
conduct cybersecurity maturity
assessments to measure their preparedness.
The ACET maturity assessment is voluntary for all credit unions.
Enforcing Consumer Financial Protection Laws and Regulations
An essential part of the N C U Aâs statutory responsibilities
is to examine credit unions with
10 billion dollars or less in assets for compliance with consumer financial
protection laws and regulations.
The agencyâs consumer compliance oversight ensures the credit union
system not only protects credit union member-owners from unfair practices or
predatory products but also meets the saving and credit needs of its members,
especially those of modest means.
In 2024, the agency focused its attention on overdraft programs, fair
lending, automobile lending, Truth in Lending Act requirements, and
Guaranteed Asset Protection insurance.
The N C U A also prioritized credit union compliance with the
Flood Disaster Protection Act.
The N C U A has also recently increased visibility into the
overdraft and non-sufficient funds fees charged by credit unions.
Beginning with the 2024 first quarter Call Report, the N C U A has required
federally insured credit unions with more than 1 billion dollars in assets
to separately disclose their income from overdraft and non-sufficient funds fees.
In addition to promoting transparency, these Call Report changes allow
credit unions to benchmark their overdraft programs against their peers.
Separate from the agencyâs annual supervisory priorities for consumer
financial protection, the agency completes fair lending examinations
at selected institutions.
In the N C U Aâs fair lending examinations conducted in 2023 and 2024, the agency
identified some patterns or practices of:
Discrimination based on age and marital status, Illegal race-based redlining,
Indirect lending pricing concerns,
Home Mortgage Disclosure Act violations,
Equal Credit Opportunity Act notification and government
monitoring information violations,
Servicemembers Civil Relief Act violations, and
Instances of inadequate fair lending compliance management systems.
The N C U Aâs fair lending efforts aim to create a financial system that works
for all Americans, regardless of their race, ethnicity, age, sex, orientation,
marital status, religion, or disability.
By working to enforce fair lending and consumer financial protection laws, the N
C U A is ensuring that the American system of cooperative credit remains faithful to
its mission of âpeople helping people.â
In 2024, the N C U A referred six credit unions to the U.S.
Department of Justice for illegal age discrimination, one for age
and marital status discrimination, and one for race-based redlining.
These referrals have affected over 23,000 consumers, and associated remediation
expenses exceeded 500,000 dollars.
Separately, the U.S Department of Justice announced in October the first
ever race-based redlining settlement against a federally insured credit union.
In February of this year, the N C U A also joined with other Federal
Financial Institution Examination Council (FFIEC) agencies to issue a
statement of examination principles related to valuation discrimination and
bias in residential real estate lending.
These principles assess whether credit unionsâ compliance and risk management
practices are sufficient to identify and mitigate discrimination or bias in
their residential real estate valuation
practices.
In July, the N C U A again collaborated with the other FFIEC agencies
to issue Interagency Guidance on Reconsiderations of Value (ROV) of
residential real estate valuations.
The guidance offers examples of ROV policies and procedures
that a financial institution may
implement to help identify, address, and mitigate discrimination risk.
Also in July, the N C U A, the other FFIEC agencies, and the Federal Housing
Finance Agency issued the Automated Valuation Model (AVM) final rule
as required by the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
The rule implements quality control standards, including a non-discrimination
standard, for A V Mâs used by mortgage originators and secondary market issuers.
Supporting Minority Depository Institutions
Minority depository institutions (MDIs) offer safe, fair, and affordable
financial services and products to minority individuals and communities
that the financial services system has historically underserved.
At the end of the second quarter of 2024, there were 490 MDI credit unionsâmore
than one in ten federally insured credit unionsâcollectively serving more
than 6.6 million members and holding assets of more than 90 billion dollars.
MDI credit unions tend to be smaller institutions with approximately 183
million dollars in average assets.
Yet, their financial performance measures, including return on average assets, net
worth ratio, and net interest margins, are frequently comparable to and often
exceed those of other credit unions.
In 2022, the N C U A launched the Small Credit Union and MDI Support Program to
provide these institutions with help on a range of operational and financial topics.
For 2024, the N C U A allocated 4,600 staff hours across its three regions to
support MDIs through this initiative.
Further, MDI credit unions with a low-income designation are eligible
for Community Development Revolving Loan Fund grants and loans.
In the 2024 grant round, 39 MDIs
received nearly 1.4 million dollars in technical assistance grants.
These grants assist MDIs in remaining competitive by helping them expand access
to fair and affordable products, offer new and innovative financial products
and services tailored to the needs of their members and communities, build
greater internal capacity, and bolster cybersecurity systems and practices.
Congress authorized all MDIs to be eligible for Revolving Loan Fund grants
and loans during the 2023 grant round.
However, that authorization was not extended in the 2024 appropriation,
removing access to the Revolving Loan Fund for nearly 100 MDIs.
The N C U A accordingly requests lawmakers reinstate eligibility
for all MDI credit unions.
Promoting Financial Technology
The financial technology industry is rapidly evolving with developments
to enhance products and services.
To address these developments the N C U A has recently:
Established a public-facing financial technology and digital asset webpage;
Updated the share insurance FAQs to clarify that digital assets do not
qualify for share insurance coverage;
Established office hours to engage credit unions and financial
technology companies; and
Updated the Credit Union Profile to collect information about credit unionsâ
use of financial technology companies.
Based on data collected by the N C U A, few credit unions use
distributed ledger technology or offer cryptocurrency services, through
third-party vendors, to their members.
The agency is monitoring the use of these technologies to ensure proper governance,
risk management, and compliance.
Advancing Diversity, Equity, Inclusion, and Accessibility
The N C U A is committed to promoting diversity, equity, inclusion, and
accessibility (DEIA) within the agency and the credit union system.
The agency advances these principles through external initiatives, like its
annual DEI Summit, an MDI Symposium, the statutorily mandated voluntary Credit
Union Diversity Self-Assessment, and internal efforts such as employee resource
groups (ERGs), outreach to potential suppliers, and hiring initiatives to
encourage a diverse pool of applicants.
The agencyâs Federal Employee Viewpoint Survey results show that
the N C U A draws strength from diverse talents and perspectives.
The agency uses data from the survey, including the DEIA index, to inform its
data-driven strategies and activities.
In 2024, the index revealed that 79.1 percent of N C U A respondents reported
positive perceptions of agencyâs practices related to DEIA, compared
with the government-wide DEIA index
average of 72.8 percent and 76.2 percent for medium-sized agencies.
The N C U A also supports workforce diversity, equity, inclusion, and
belonging through its training, outreach, and recruitment; special
emphasis programs; and ERGs.
During fiscal year 2024, 42.5 percent of N C U A employees were members of
an ERG, putting the N C U A well above the standard membership goal of 10
percent of an organizationâs workforce.
The agency continues building a diverse talent pipeline to attract, hire,
and retain highly skilled employees.
Since 2017, the N C U A has consistently exceeded the federal employment goals
for employees with disabilities and employees with targeted disabilities.
In fiscal year 2024, 17.7 percent of the agencyâs workforce was made
up of individuals with disabilities, and 4.4 percent of employees reported
having a targeted disability.14
The N C U A supports accessibility through its hiring efforts,
reasonable accommodations program, Disability Solutions Desk, and
Section 508 compliance program.
In the General Services Administrationâs 2023 report to Congress on compliance
with Section 508 of the Rehabilitation Act of 1973, the N C U A had a
maturity level of Moderate and a conformance level of Very High.
The N C U A is also building a diverse supplier network to obtain
innovative solutions and the best value for its contract actions,
particularly in information technology.
By fiscal year-end 2024, the agency awarded 42.2 percent of reportable
contract dollars to minority-owned or women-owned businesses.
To promote DEIA in the broader credit union industry, the N C U A provides
credit unions a voluntary diversity self-assessment tool to measure
their progress in applying DEIA
principles.
The N C U A administers the self-assessment through a third party
and receives and reports aggregate data in its Office of Minority and Women
Inclusion Annual Report to Congress.
Rulemaking Activities
During the last two quarters, the N C U A has pursued several rulemaking activities.
In April, for example, the N C U A Board issued an advance notice of
proposed rulemaking to improve and update the agencyâs records preservation
program regulation and accompanying
guidelines.
In 2023, the N C U A received feedback that aspects of Part 749 were
potentially burdensome and unclear.
Based on this feedback, the Board sought input on whether there was a
need to update Part 749 to ensure that credit unions continue to properly
preserve records vital to their business operations, the N C U Aâs supervisory
needs, and the needs of their members.
In July, the N C U A Board approved a proposed rule on
incentive-based compensation as required by the Dodd-Frank Act.
Specifically, Section 956 of the Dodd-Frank Act requires that the
appropriate federal regulators jointly issue regulations or
guidelines prohibiting incentive-based compensation arrangements at
covered financial institutions that
encourage inappropriate risks by providing excessive compensation or that
could lead to material financial loss.
These standards must also require those covered financial
institutions to disclose information concerning incentive-based
compensation arrangements to the appropriate federal regulator.
Also in July, the N C U A Board approved a proposed rule requiring
federally insured credit union boards of directors to establish, and update
at least annually, written succession
plans for key positions.
A succession plan would be required to include a credit unionâs strategy
for recruiting candidates to each of the key positions and to promote the
credit unionâs safe and sound operation.
The revised proposed rule is based on a 2022 proposal and includes
several changes based on industry comments and feedback received.
The lack of succession planning continues to be cited as a driving factor in
credit union mergers, and the revised proposal aims to moderate some of
those factors leading to such mergers.
The interagency notice of proposed rulemaking required by the Financial Data
Transparency Act of 2022 was published in the Federal Register on August 22, 2024.
This joint proposal serves to promote the interoperability of financial regulatory
data across the financial regulatory agencies through the establishment
of data standards for identifiers of legal entities and other information
collections submitted to the agencies.
Once the interagency rule is finalized, the N C U A will develop
an agency-specific rule to determine the applicability of the joint
standards to the collections of information under its purview.
In September, the N C U A Board approved a final rule to implement the Fair Hiring
in Banking Act, enacted by Congress in the 2022 National Defense Authorization Act.
As required by Congress, the final rule allows people with convictions
for certain minor or older offenses to work in the credit union industry
without applying for the N C U A Boardâs
approval.
Section 205(d) of the Federal Credit Union Act, as amended by the Fair Hiring in
Banking Act, generally prohibits, except with the prior written consent of the N C
U A Board, a person who has been convicted of or has a program entry for certain
criminal offenses involving dishonesty or breach of trust from participating
in the affairs of a credit union.
The final rule addresses the individuals and types of offenses covered by Section
205(d) and the N C U Aâs procedures for reviewing a consent application.
This final rule also aligns the N C U Aâs regulations with those of the Federal
Deposit Insurance Corporation (FDIC).
Also in September, the N C U A Board approved a final rule which simplifies the
N C U Aâs share insurance regulations by establishing a âtrust accountsâ category
to provide coverage of funds in both revocable and irrevocable trusts deposited
at federally insured credit unions in the accounts of members or those otherwise
eligible to maintain insured accounts.
The rule aligns the insurance coverage provided to federally insured credit
union membersâ revocable and irrevocable trust accounts with the coverage provided
to consumers who maintain the same accounts at federally insured banks.
Hurricane Recovery Eforts
Given the importance of hurricane recovery efforts to the Chairman and members of
the committee, the N C U A has worked diligently in recent weeks to respond to
Hurricane Helene and Hurricane Milton.
Hurricane Helene struck the âbig bendâ area of the Florida
Panhandle as a Category 3 hurricane on September 26, affecting several states.
Hurricane Milton followed closely behind as a Category 3 on October 9
near Siesta Key, Florida, primarily affecting Florida and Georgia.
Credit unions worked quickly to resume services, where
possible, at affected branches.
Credit unions also undertook unprecedented efforts to respond to a need for cash when
the telecommunications needed to operate credit and debit services broke down.
N C U A staff additionally contacted 113 low-income designated credit
unions in the worst-hit areas to inform them on how to receive emergency
grants and loans from the Community Development Revolving Loan Fund.
The N C U A also delayed its examination and supervision activity and provided
extensions for regulatory filing deadlines so the management of affected
credit unions could focus on restoring facilities and services to their members.
Legislative Requests
As the current Congress draws to a close and lawmakers prepare for a
new Congress, the N C U A suggests certain statutory changes to better
enable the agency to achieve its mission to protect the system of
cooperative credit and its member-owners through effective chartering,
supervision, regulation, and insurance.
Restoring Third-Party Vendor Oversight
Credit unions frequently engage third-party vendors and credit
union service organizations to improve operational efficiencies
and enhance member services.
The N C U Aâs lack of third-party vendor oversight remains a significant
regulatory blind spot that has led to vulnerabilities in the credit union system
and obstacles to effective collaboration amongst all financial regulatory agencies.
Credit unions holding approximately 90 percent of industry assets use
key services provided by unregulated third-party service providers, posing
potential risks to financial stability.
Last November, a single third-party vendorâs cybersecurity incident disrupted
the daily operations of 60 credit unions.
In June, a large credit union with 9.5 billion dollars in assets reported
the personal information of more than one million current and former
members and employees had been accessed during a ransomware attack.
The breach initially occurred on May 23, but the ransomware hackers did not shut
down most of the credit unionâs online and mobile banking systems until June 29.
These incidents highlight a significant vulnerability to the 2.3 trillion
dollar credit union industry and have the capacity to debilitate our nationâs
critical infrastructure if left unchecked.
At a minimum, this lack of visibility impacts credit union safety and
soundness and the Share Insurance Fund.
If Congress were to restore vendor authority, the N C U A would implement
this oversight through a risk-based examination program focusing on
services related to safety and soundness, information security,
cybersecurity, BSA/AML compliance, consumer financial protection, and
areas posing significant financial risk for the Share Insurance Fund and
national economic security.
Having this oversight would reduce N C U Aâs requests to credit
unions for intervention when vendors are experiencing problems.
It would also provide credit unions with access to N C U A examination summaries
to aid in their due diligence of vendors.
This ability is currently available to commercial banks, not credit
unions, which places the industry at a competitive disadvantage.
Independent entities like the Government Accountability Office, the Financial
Stability Oversight Council, and the N C U Aâs Oice of Inspector General
have all identified this deficiency as a significant obstacle to the N
C U Aâs financial stability mission.
Reforming the Central Liquidity Facility
As discussed earlier in this testimony, the N C U A Board unanimously supports
a proposed statutory amendment to allow corporate credit unions to serve as CLF
agents for their member credit unions.
A bipartisan bill introduced in the first session of the 118th Congress
would enable corporate credit unions to purchase CLF capital stock on
behalf of a subset of their members.
Specifically, the legislation would allow corporate credit unions
to contribute capital to provide coverage for smaller members with
assets under 250 million dollars.
Enacting this legislation would help insulate the credit union system from
future liquidity events, like those that occurred in the first half of 2023.
Providing Flexibility for Administering the Share Insurance Fund
The N C U A further urges Congress to amend the Federal Credit Union Act to
eliminate restrictions on the Share Insurance Fundâs equity ratio and on
the agencyâs ability to levy premiums.
Such changes would improve fund management and align the N C U Aâs
authority to manage the Share Insurance Fund with the FDICâs authority in
maintaining its Deposit Insurance Fund.
Specifically, proposed changes should remove the restrictions on levying Share
Insurance Fund premiums when the fundâs equity ratio is equal to or greater
than 1.30 percent and when the premium charged exceeds the amount needed to
restore the equity ratio to 1.30 percent.
A statutory change should also eliminate the 1.50 percent ceiling
from the current statutory definition of the ânormal operating levelâ for
the Share Insurance Fund, which limits the Boardâs ability to increase the
size of the fund above this level.
Together, these amendments would bring the N C U Aâs statutory authority over
the Share Insurance Fund more in line with the FDICâs authority as it relates to
administering the Deposit Insurance Fund.
These amendments would also better enable the N C U A Board to proactively
manage the Share Insurance Fund by building reserves during economic
upturns so that sufficient money is available during economic downturns.
A more counter- cyclical approach would better ensure that credit unions will
not need to impair their one percent contributed capital deposit or pay
premiums during times of economic stress, when they can least afford it.
Increase Grant Assistance for the Community Development Revolving Loan Fund
Grants and loans from the Community Development Revolving Loan Fund
give eligible credit unions resources to improve service to
their members and stimulate economic development in their communities.
Through its stewardship of the Revolving Loan Fund, the N C U A provides funds
to these credit unions for various initiatives approved by the agencyâs
Board, including expanding outreach to underserved populations, improving
digital services and cybersecurity, enhancing staff training, and
facilitating capacity-building efforts.
Maintaining a long-running trend, the N C U Aâs ability to fulfill
grant requests continued to be surpassed in the 2024 grant round.
The agency received 271 applications requesting more than 8.3 million
dollars but was only able to fund about 3.5 million dollars
in grants to 135 credit unions.
The N C U A, therefore, requests Congress increase the Revolving
Loan Fund appropriation to 10 million dollars to keep up with
the growing demand for requests.
The Revolving Loan Fund has a long and successful track record as an
effective way to provide essential resources to low-income credit unions.
Conclusion
In sum, the N C U A will continue to oversee credit union performance
and coordinate with other federal financial institution regulators, as
appropriate, to ensure the overall resiliency and stability of our nationâs
financial services system and economy.
Congress can further these efforts by adopting the legislative
changes suggested above.
Thank you again for the invitation to testify.
I look forward to working with the committee to safeguard and
strengthen the credit union system.
This concludes the testimony
If your Credit union could use assistance with your exam, reach out to Mark Treichel
on LinkedIn, or at mark Treichel dot com.
This is Samantha Shares and we Thank you for listening.