Calling 2020 a year in which “the many participants within the credit union system rose to numerous challenges,” Todd Harper, NCUA chairman, on Wednesday briefed the U.S. House of Representatives Committee on Financial Services on the state of the industry.
Throughout the COVID-19 pandemic, Harper said that the NCUA has focused on protecting the health and safety of NCUA staff and contractors, assessing the impact of COVID-19 on credit union members and operations and analyzing how the pandemic will affect the future financial condition of credit unions and the Share Insurance Fund.
Harper also touched on a series of other topics during in his address, and said that effective financial institutions regulators like the NCUA need to be:
- fair and forward-looking;
- innovative, inclusive, and independent;
- risk-focused and ready to act expeditiously when necessary; and
- engaged appropriately with all stakeholders to develop effective regulation and efficient supervision.
“This regulatory philosophy is my North Star, and it is guiding the agency’s response to the COVID-19 pandemic’s economic fallout and positioning the NCUA for future challenges,” Harper told the committee. “This regulatory philosophy has also informed my priorities for the agency, including capital and liquidity, consumer financial protection, cybersecurity, diversity and inclusion and economic equity and justice.”
Regarding the state of the credit union system, Harper said that although the pandemic and its associated contraction in economic activity influenced credit union performance throughout 2020, the credit union system has remained on a solid footing. “In recent months, economic conditions have improved and the outlook for the year ahead is generally favorable,” he said.
Looking ahead, Harper said that the top priority for the NCUA is ensuring that the credit union system and the Share Insurance Fund are prepared to weather any economic fallout related to the pandemic. To protect the Fund, the agency is actively monitoring certain segments of the system, including credit unions closely connected to the oil and gas, travel and leisure, and agricultural sectors, among others, while the agency is also focusing on credit unions with elevated risks, such as those with large concentrations of commercial real estate loans relative to assets, he said.
Harper also highlighted recent rulemakings as well as the agency’s efforts to advance diversity and inclusion, improve consumer financial protection and advance economic equity and justice. He concluded with legislative requests related to vendor authority, flexibility in managing the National Credit Union Share Insurance Fund and permanently extending the temporary enhancements of the Central Liquidity Facility.
The full text of Harper’s testimony can be accessed on the NCUA website.