Credit unions that garnish members’ economic stimulus payments “should consider the reputational issues that will come from these practices,” said Todd M. Harper, NCUA chairman, on Tuesday.
Harper referred to credit unions as financial first responders who should protect members’ relief payments from “collection, garnishment, and the right of offset,” and urged them to demonstrate the cooperative philosophy at the heart of the credit union movement. He said that failing to accommodate members’ needs during tough economic times will sacrifice a credit union’s long-term financial viability and create negative publicity for the entire credit union system.
Harper also said that, although the COVID-19 pandemic continues to pose challenges for the country and the credit union system, the economic outlook has recently improved,
“The recently enacted $1.9 trillion American Rescue Plan Act will help shore up household finances and is expected to give the economy a substantial boost,” Harper said. “The return of warmer weather and rising number of Americans who have been vaccinated should also spur increased economic activity and job creation in the months ahead.”
Yet, even with these improvements, Harper cautioned that it would take time for the economy to fully recover, and credit unions “face a prolonged period of very low interest rates” and added that, in the year ahead, “your credit union’s ability to manage interest-rate risk will play a crucial role in financial performance.”
Harper made the remarks during a Maine Credit Union League town hall meeting.