ALEXANDRIA, Va.—NAFCU and CUNA have each submitted comments to NCUA in response to the agency’s request for information (RFI) on current and future climate and natural disaster risks to federally insured credit unions (FICUs).
In NAFCU’s letter, Senior Regulatory Affairs Counsel James Akin urged the board to recognize the variety of climate risk profiles among the credit union industry and avoid attempts to issue comprehensive guidance on climate-related financial risk.
In addition, Akin called on the agency to avoid issuing proposed regulation on this issue unless directed by Congress and, instead, defer to the Financial Oversight Stability Council (FSOC) as it formulates guidance to ensure that credit unions are not unfairly burdened by regulation in this area.
The letter also reviewed analysis conducted by NAFCU’s research team, which called into question the results of the NCUA’s assessment of the current risk to FICUs and their assets.
Akin reiterated the current steps credit unions are taking independently to manage climate-related financial risk and have been focused on financially vulnerable communities through efforts like the Greenhouse Gas Reduction Fund.
CUNA: ‘Wholehearted’ Opposition
CUNA said it opposes any rulemaking/regulatory activity in the area of climate-related financial risk beyond the request for information issued by NCUA.
“We wholeheartedly oppose any subsequent regulatory activity that would establish mandatory reporting procedures for credit unions or to otherwise prevent credit unions—directly or indirectly—from continuing to make independent business decisions as they deem most appropriate in order to serve their members,” the letter reads. “Credit unions know their operations, fields of membership, individual members, and potential risks best, certainly better than the NCUA, which appropriately focuses on the industry on a broad scale.”
CUNA added that—if NCUA feels compelled to take subsequent steps in this area—it should be limited to informal guidance or educational resources.
Where NCUA Should Focus
“The NCUA should focus on providing credit unions with the resources they need to manage climate-related financial risks, rather than imposing any new regulations that will only hamper their ability to continue serving their members,” the letter reads.
CUNA further told the agency it can support credit unions and communities with heightened exposure to climate-related risk by providing “clear and robust support” for credit unions’ participation in programs created through the Environmental Protection Agency’s Greenhouse Gas Reduction Fund.
“While there is tremendous interest among the credit union movement to participate in the Fund and ensure that funding is routed to communities as directly as possible, the possible routes of participation for credit unions are not currently clear,” the letter reads. “Thus, we ask the NCUA to facilitate credit unions’ participation in the Fund in any manner possible.”
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