MEMPHIS, Tenn.–In remarks to Inclusiv’s annual conference here, NCUA Chairman Todd Harper noted he had been able to visit the city’s National Civil Rights Museum, and said the work being done by minority depository institutions and community development credit unions is a way to carry on the legacy of Dr. Martin Luther King.
King was assassinated in Memphis in 1968.
“It is the work of your credit union and the other credit union leaders sitting near you today that is paving the path for greater economic opportunity, greater economic equity, and greater economic justice,” said Harper. “And, it’s the NCUA’s job to ensure that the credit union system fulfills its statutory mission of meeting the credit and savings needs of people, especially those of modest means. Among our most visible and impactful initiatives to achieve that objective are the grants the NCUA awards through Community Development Revolving Loan Fund. The application period for the 2023 grants just opened…and I strongly encourage all eligible credit unions to apply.”
Two Initiatives
Some $3.5 million in grant money is available, Harper added, before outlining changes to the program and two new grant initiatives for 2023 that include:
- The Impact through Innovation pilot, which has a maximum award of $100,000 and which targets under-resourced communities by focusing on banking deserts, affordable housing, credit invisibles, and fintechs.
- The Small Credit Union Partnership pilot, which has a maximum award of $50,000 and which is designed to assist small credit unions in pooling resources to realize economies of scale and achieve their growth objectives.
‘The Right Environment’
Harper said that to support and preserve small credit unions and MDIs, the agency must also “create the right environment for their success,” and that includes facilitating access to capital through the agency’s subordinated debt rule.
“Over the last year, we have heard Inclusiv’s concerns about the utility of the NCUA’s subordinated debt regulation,” Harper said. “And, it’s why the NCUA board amended the NCUA’s rules to unlock the full potential of the Emergency Capital Investment Program for minority depository institutions and community development credit unions by allowing them to accept this capital for 30 years instead of just 15 years. It’s why the NCUA modified its rules to make the regulation more user-friendly and increase flexibility for credit unions, such as clarifying the requirements for who can conduct a legal review of the underlying agreements.
“And, it’s why the NCUA is now working to ensure that non-complex, bilateral secondary capital deals for low-income credit unions continue with minimal friction,” he added.
Harper said NCUA anticipates receiving secondary capital applications from several Inclusiv members in the coming weeks.
No Funds Deployed
Harper further noted Inclusiv administers a $20 million Racial Equity Investment Fund to deploy secondary capital investments at MDIs that carries a 2% rate.
“Yet, none of these funds have been deployed, which is why the NCUA is committed to exploring additional ways to expedite the release of this funding,” the chairman remarked. “After all, the money that gets deployed as secondary capital at low-income credit unions can do much more to improve under-resourced communities than the money that sits, attracting dust in a vault and accruing limited interest.”
Customized Examination Procedures for MDIs
Noting that through NCUA’s work on the Federal Financial Institutions Examination Council, the agency has learned other federal banking agencies do not use non-MDI peer metrics when assessing MDIs, he said NCUA has also customized its own examination procedures.
"The new MDI-specific procedures represent an important evolution of the examination process. Ultimately, the payoff is in not only giving the NCUA a more accurate picture of an MDI, but in providing MDIs with useful metrics to benchmark their work against their true peers, and in the process, enhance their service to members and under-resourced communities,” he said.
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