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NAFCU reiterates stability of CU industry to lawmakers
The House Financial Services Committee holds an oversight hearing today with federal financial regulators, including NCUA Chairman Todd Harper. Ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler reiterated that “[t]he credit union system remains safe, strong and reliable. Credit unions stand ready to meet the financial services needs of the American consumer.”
In addition to Harper, Federal Reserve Vice Chairman for Supervision Michael Barr, FDIC Chairman Martin Gruenberg, and Office of the Comptroller of the Currency Acting Comptroller Michael Hsu will testify before the committee.
With much of the discussion expected to focus on recent bank failures, Thaler highlighted the credit union difference and urged the committee “to ensure that problems from a few banks do not create new burdens for well-run credit unions in an effort to respond to this recent situation.”
“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,” Thaler wrote. “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.”
Thaler outlined several credit union priorities for lawmakers to consider, primarily by modernizing provisions of the Federal Credit Union Act, including:
- addressing limitations of the 15 percent permissible interest rate ceiling by setting a floating rate of the prime rate plus 15 percent;
- providing a broader set of investment authorities for federal credit unions to earn a return;
- raising the member business lending (MBL) cap to ensure credit unions can effectively lend to small businesses in their communities; and
- expanding the loan maturity limit.
He also reiterated NAFCU’s opposition to granting the NCUA third-party vendor authority, noting that the costs would be borne by credit unions – thereby impacting their 135 million members – and the fact that “these vendors are already examined by other regulators, and the NCUA has access to information regarding them through the Financial Stability Oversight Council (FSOC) upon which it sits.” In addition, Thaler noted that while NAFCU urges parity be maintained in coverage amounts between the FDIC and National Credit Union Share Insurance Fund, it does not support efforts that would allow NCUA to raise the Normal Operating Level via statute or to make is easier to assess premiums on credit unions.
NAFCU will monitor today’s hearing, set to begin at 10 a.m. Eastern, as well as Thursday’s oversight hearing with the Senate Banking Committee. Stay tuned to NAFCU Today for insights from the discussions.