NCUA’s Harper, federal regulators testify before House Financial Services Committee

CUNA highlighted the credit union system’s overall health and supported several NCUA-related priorities in a letter to the House Financial Services Committee Tuesday. The letter was sent for the record of the committee’s hearing on oversight of federal financial regulators.

“America’s credit unions are well-capitalized with a 10.7% net worth-to-asset ratio and an 8.8% equity capital ratio,” the letter reads. “The loan-to-savings ratio stands at 82.1%. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) was 11.5% in February of 2023, up from 11.1% in January. These statistics indicate that credit unions are healthy and stable.”

The letter also notes:

• CUNA continues to strongly object to any suggestion that the NCUA may need to charge a premium in the near future and/or that statutory changes to the NCUSIF funding guidelines are needed.
• CUNA supports the extension of an expired CARES Act provision enhancing NCUA’s Central Liquidity Facility by, among other things, allowing corporate credit unions to act as agents for smaller (under $250 million in assets), non-CLF member, natural person credit unions.
• Credit unions must receive parity with banks in any increased federal deposit insurance coverage.
• Privately insured credit unions must have access to the Federal Reserve’s new Bank Term Funding Program (BTFP).
• CUNA is concerned that granting NCUA supervisory authority over third-party vendors would require the agency to increase its budget to hire personnel with appropriate expertise.

Rep. Brad Sherman, D-Calif., said during the hearing he supported credit union parity with banks on several levels.

“We need parity for credit unions both as to the level of depositor insurance as to access to liquidity facilities,” he said. “The banks are not doing what we need them to do.”

Rep. Warren Davidson, R-Ohio, noted that almost half of the privately insured credit unions are in Ohio, and asked Federal Reserve Vice Chair for Supervision Michael Barr if there were plans to include them in the BTFP.

“Not at this time,” Barr responded.

Sens. Sherrod Brown, D-Ohio, and J.D. Vance, R-Ohio, have also called on the Fed to ensure privately insured credit unions can access the BTFP.

Rep. Joyce Beatty, D-Ohio, asked about the 43% decline of black owned bank minority depository institutions (MDI) since 2001.

Harper pointed to credit union support and growth, noting “on the credit union side there are 503 MDIs, nearly 300 of them are black owned, so it is a sizeable portion of our marketplace.”

Rep. Erin Houchin, R-Ind., also expressed concerns on behalf of privately insured credit unions in Indiana and across the country.

“While these institutions play an important role in their communities, they do not have access to the Fed’s bank term funding program,” she said. “If they face unexpected demand for deposit withdrawals, all financial institutions are susceptible to liquidity issues but not all financial institutions are able to access this liquidity.”