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NCUA’s Hood reiterates 'no need' for SIF premium during House testimony
NCUA Chairman Rodney Hood testified before the House Financial Services Committee Thursday as part of a panel with other banking regulators to discuss oversight of financial regulators. During the hearing, Hood reiterated his stance that the share insurance fund (SIF) remains strong and that there is no need to assess a premium at this time.
Hood reported on the state of the share insurance fund (SIF), stating that as of June 2020 the SIF has reported $17.7 billion in assets, with the equity ratio currently standing at 1.32 percent. Should the equity ratio fall below 1.2 percent, the NCUA is statutorily obligated to establish a restoration plan and could potentially assess a premium charge to restore the fund.
NAFCU has previously advised the NCUA Board to consider measures to allow credit unions additional investments – even on a temporary basis – rather than assess a premium to lower the ratio.
In addition, when discussing the Small Business Administration’s paycheck protection program (PPP), Hood stated that the NCUA will assign PPP loans a zero percent risk weight.
On the current expected credit loss (CECL) accounting standard, Rep. Blaine Luetkemeyer, R-Mo., thanked Hood for his October op-ed calling for an exemption for credit unions under the standard, arguing that its compliance costs outweigh its benefits. NAFCU has continuously called for an exemption for credit unions and continues to urge for a longer phase-in option.
Hood also gave an update on the status of the credit union system and the NCUA’s response to the coronavirus pandemic, including the agency’s focus on the effects of loan payment forbearance, loan delinquencies, and modifications on credit union liquidity.
Read Hood's full prepared remarks here.
The association this week outlined six main priorities that would provide credit unions with relief in a letter to the NCUA Board. In addition, NAFCU shared the priorities with the committee ahead of yesterday’s hearing and stressed the importance of extending certain CARES Act provisions, including changes to the central liquidity facility beyond Dec. 31.
NAFCU has worked with the NCUA throughout the pandemic to ensure credit unions' concerns are addressed, NAFCU President and CEO Dan Berger recently met with Hood last week to discuss a number of issues.
The association will continue working closely with the NCUA and Congress to address credit unions’ concerns amid the pandemic. Access NAFCU's coronavirus-related resources here.