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NCUA Chairman Todd Harper addressed attendees of NAFCU’s Congressional Caucus on Wednesday, giving updates on the health of the credit union industry, advice to credit unions in the current economic climate, and more.

Chairman Harper opened his remarks by highlighting that the health of the credit union industry remains strong, stating “Overall, the numbers point to a healthy credit union system that is facilitating the ability of households to achieve their financial goals.”

Harper noted the growth of credit unions continues, pointing to a 16 percent increase in the credit union loan amount, year-over-year. 

However, he reminded attendees of the challenges credit unions face in the current economic and geopolitical climate. Harper said that there are growing liquidity concerns and “credit unions of all shapes, sizes, and types must remain diligent in managing ‘safety-and-soundness' concerns.”

Harper also touched on the growing concerns regarding interest rate risk. He remarked that credit unions should focus on the fundamentals of Capital Adequacy, Asset Quality, Management, Earnings, and Liquidity.

Recently, the NCUA issued a Letter to Credit Unions, clarifying changes to the agency's interest rate risk (IRR) supervisory framework. The agency stated that the changes to the IRR supervisory framework are intended to improve the “NCUA’s supervision of IRR in credit unions given current market conditions.” Of note, NAFCU met with the NCUA in July to discuss credit unions' IRR challenges and how the agency can help credit unions better manage IRR in a rising rate environment.

In addition, Harper discussed NAFCU-opposed third party vendor authority, stating that it has “taken on even greater urgency.” NAFCU has consistently opposed giving the NCUA additional authority to examine credit union service organizations, stating the agency “stay focused on where their expertise lies – regulating credit unions.”

Additionally, the NCUA released yesterday a new tool to “help small credit unions comply with the Financial Accounting Standards Board’s accounting standard on current expected credit loss, or CECL, which goes into effect for most credit unions at the start of 2023.”

“NAFCU welcomes the NCUA’s new tool which will help many small credit unions better understand and properly adhere to the current expected credit loss (CECL) accounting standard. Continued guidance from the NCUA will also be critical to assist credit unions in using CECL,” said NAFCU President and CEO Dan Berger.

More information regarding the tool is available here. NAFCU met with the NCUA and FASB during the CECL panel Tuesday during Congressional Caucus.

NAFCU recently wrote to the NCUA for the agency’s 2022 regulatory review and will continue to engage the NCUA to make sure the industry's voice is heard in Washington.