NEW CASTLE, N.H.–In wide ranging remarks to credit unions here, NCUA Chairman Todd Harper discussed the banking crisis, the need for managing interest rate risk and liquidity, a troubling comment he heard made during a podcast, and more.
Harper touched on the recent bank failures, which he said reflect the “need for rapid and decisive regulatory action to stem the tide of fear when consumers’ hard-earned savings is hanging in the balance.”
He noted the agency has gotten questions around the impact of the bank failures on NCUA and credit unions, and said the primary lesson is the need to manage capital and interest rate and liquidity risk. To that end, he said NCUA has recently published several letters and updated its guidance to examiners.
Multiple Wins
“By increasing clarity and flexibility, these changes to the supervisory framework for interest rate risk are a win for both consumers and for credit unions and for examiners,” said Harper. “However, managers and boards of directors must remain diligent in managing the potential risks on the balance sheets and continue to monitor the economic conditions and interest rate environment. The good news is that the credit union system overall remains well positioned at this time to handle any economic disruptions.”
At several points during his remarks Harper stated he wants to see the expanded authorities granted the Central Liquidity Facility (CLF) by Congress during the pandemic—which have since expired—expanded again. He said 3,300 credit unions lost access to the CLF when the expanded authorities granted by Congress expired.
He also called on credit unions to continue to provide safe, fair and affordable access to financial products and services. Speaking to the issue of consumer financial protection, Harper shared the story of recently listening to a podcast with a former leader at NCUA and some examiners who were talking in some detail about agency supervisory priorities for 2023, but when the subject turned to financial protection “the conversation ground to a halt.”
‘Don’t Give a Bleep’
“The podcast host recounted the story from when he was a problem case officer at the NCUA and he was in a meeting in which the director of special actions at the time addressed the team about consumer financial protection by saying, ‘I don't give a (bleep) about that. Are they making money? That's what I care about’,” Harper related. “That attitude, unfortunately permeated NCUA for more than three decades. But it is wrong. Let me be perfectly clear on this point: safety and soundness and consumer financial protection do not compete with one another. It is not a zero-sum game where only one gains…Consumer compliance is not just a good principle, it's good business.
Cybersecurity
“You may have also heard me say that the single biggest credit union issue that keeps me awake at night is cyber security, and that has certainly remained true throughout my term,” Harper said. “Ransomware, social engineering, and phishing are but a few of the known examples of the cyber threats that we all face, but what worries me more are the countless threats that we do not know about. These risks are likely to continue and accelerate into the foreseeable future…To that end we're implementing the new information security examination (ISE) procedures.
In September, NCUA’s cyber incident reporting requirements will go into effect.
Funds & Grants
Harper noted NCUA’s Revolving Loan Fund has grants to support digital services and cybersecurity. He urged CUs to apply for grants and noted NCUA has double the funds it had available last year, with $3.5 million for grants. As CUToday.info reported, NCUA also has two new grant programs.
Third-Party Oversight
As he has at numerous prior events, Harper called for NCUA to be given vendor oversight authority, saying its absence creates risk because the agency can’t see the full picture.
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