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NCUA Board: Credit Union System Is Safe and Sound

By David Baumann - March 17, 2023

Following bank failures, agency highlights stability of credit union industry at monthly meeting.


In the aftermath of the recent collapse of two banks, NCUA board members on Thursday aimed to reassure Americans that the credit union system is resilient, and that the agency is prepared to address any questions related to the safety and soundness of credit unions.

“I want to assure everyone that the credit union system remains well-capitalized and on a solid footing,” board Chairman Todd Harper said at the start of the agency’s monthly board meeting.

Shortly after making his opening statement, Harper left the meeting.

“After experiencing sudden pain in his stomach and chest, Chairman Harper sought a medical evaluation,” explained NCUA spokesman Joseph Adamoli. “The Chairman was sent home after all tests were found normal. He looks forward to resuming his schedule tomorrow.”

Statement from the Chairman

Discussing the events of the past week, Harper said prior to leaving that the NCUA is working with other federal regulators to ensure the stability of the overall financial services system.

“It’s also important to remember that credit unions have access to a wide range of liquidity sources, including important federal liquidity backstops,” he said. “The NCUA’s Central Liquidity Facility can serve as a backup source of liquidity to member credit unions. The Federal Reserve’s Discount Window and the newly created Bank Term Funding Program are also available to well-run and well-capitalized credit unions.”

Still, he added, the recent events serve as a reminder of the dangers of concentration risk and the need for effective risk management in other areas.

“Credit unions must remain diligent in managing risk and ensuring their safety and soundness,” he said. “Consumers can remain confident that their hard-earned deposits at federally insured credit unions are safe, just as they always have been, and that the NCUA will continue to act expeditiously, when needed, to preserve the stability of the credit union system.”

Further Board Member Reaction

Board member Rodney Hood said that recent events are not similar to the 2008 economic crisis, adding that he wanted to assure people that, “your funds are safe in America’s federally insured credit unions.”

Subordinated Debt Rule Approved

At the meeting, the NCUA board also approved a final subordinated debt rule.

Among other things, the rule requires that any credit union seeking to issue notes with maturities longer than 20 years demonstrate how such instruments would continue to be considered “debt.”

In a written statement, Harper said that the rule will facilitate the access of eligible credit unions to the Treasury Department’s Emergency Capital Investment Program (ECIP), which was created during the coronavirus pandemic.

The role of the program, he explained, is to support communities of color and low-income households hit hardest by the COVID-19 pandemic’s financial disruptions.

“ECIP funding is a much-needed boost to these communities, allowing them to address short-term needs and achieve long-term financial stability,” he wrote.

Board Vice Chairman Kyle Hauptman noted that much of the rule deals with “synching up” subordinated debt regulations with the ECIP program.

“Subordinated debt is a powerful tool that can assist credit unions in bringing financial services to underserved communities,” he said. “Chartering new credit unions is one of my priorities.”

Hood added that the ECIP provides MDIs and CDFIs with resources needed to offer access to affordable financial services in the most vulnerable communities.

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