WASHINGTON (2/10/16)--President Barack Obama unveiled his proposed 2017 budget Tuesday, maintaining or increasing funding to several important credit union-related programs while adding $19 billion for cybersecurity efforts and $10 million for a short-term, small-dollar loan program. The document also notes the overall health of the credit union system.
"The health of the credit union industry continues to improve," it reads. "Consequently, the ratio of insured shares in problem institutions to total insured shares decreased to 0.81% in September 2015 from a high of 5.7% in December 2009. With the improving health of credit unions, the National Credit Union Administration (NCUA) has been steadily reducing share insurance fund loss reserves. As of September 30, 2015, the SIF had set aside $169.5 million in reserves to cover potential losses, a reduction of 31% from the $244 million set-aside as of Sept. 30, 2013."
An addition to the budget include a short-term, small-dollar loan program for certified Community Development Financial Institutions (CDFIs). The program, which is allocated $10 million, is authorized by the Dodd-Frank Act and is designed to "support broader access to safe and affordable financial products and provide an alternative to predatory lending by encouraging CDFIs to establish and maintain small-dollar loan programs," according to the budget.
The budget also contains a proposed $19 billion for a new Cybersecurity National Action Plan, meant to allow consumers, companies and the federal government to protect identities and other personal information.
The NCUA's Central Liquidity Facility (CLF) is permitted to borrow up to $5.5 billion in fiscal year 2017, up from $5.1 billion in 2016 and $2.9 billion in 2015. The CLF is designed to improve the general financial stability of the credit union industry by meeting the liquidity needs of individual credit unions, and by statute is authorized to borrow up to 12 times its subscribed capital stock and surplus.
The budget also includes a proposed $2 million for the NCUA's Community Development Revolving Loan Fund, the same it has been for the past two years. The fund provides grants and loans to low-income designated credit unions.
Other highlights in the proposed budget include:
A proposed $245.9 million for the Treasury's CDFI Fund, which is an increase from $233.5 million in 2016. The fund is available through grants and other awards to certified CDFIs, which includes roughly 265 credit unions;
The Small Business Administration's (SBA) 7(a) loan program--which guarantees up to 85% of a loan, the portion of which does not count against a credit union's member business lending cap--has a proposed limit of $27 billion, up from $26.5 billion. The SBA's 504 program, which is for long-term fixed-rate financing for major fixed assets, is proposed for $7.5 billion, the same amount as 2016; and
The U.S. Agency for International Development's (USAID) Cooperative Development Program is proposed for $11 million, the same as 2016. USAID's microenterprise and microfinance initiative is proposed for $265 million, also the same as 2016.