WASHINGTON–NCUA Vice Chairman Kyle Hauptman had generally upbeat reviews for the state of the agency and credit unions, but he did note concerns around liquidity and car loans at credit unions.
Hauptman told the GAC audience both the credit union system and the federal deposit insurance fund are in “pretty good shape,” pointing to the NCUSIF’s current ratio of 1.30%.
As for credit unions, he said the industry has “healthy amounts” of capital, with an average net worth ratio of 10.6%, compared to 11.4% just before the 2008 financial crisis.
“Regarding liquidity concerns, if you haven’t already, talk to your leagues or CUNA about making sure you have access to our Central Liquidity Facility, especially since Congress didn’t extend the provision that allowed corporates to act as agents for a subset of their credit unions,” he said. “Last point, on the possibility of recession, and you’re probably already thinking it: Be careful out there with car loans. They comprise nearly a third of credit union loans, and we know the next economic battle often doesn’t look like the last battle. The next recession may not resemble the mortgage crisis of 15 years ago. This time around, I see the average new car price is almost $50,000, I see high rates and I see how inflation makes it even harder to make payments. Sub-prime auto loans are already showing distress, and the economy has endured significant job losses. And I’ll leave it at that, since you know your members best.”
Other Points Made
Other points made by Hauptman:
- He praised CUs for their work in financial literacy. “Our society isn’t the best at getting people to save and invest. This is where credit unions come in, with financial literacy and savings programs that improve their members’ financial wellness.”
- He said the three-member NCUA board is working well together, and he credited fellow board members Todd Harper and Rodney Hood for their efforts. “We’re public servants, and you’re the public, so we know who we work for. As my colleague Rodney Hood says, ‘We want regulation that’s effective, not excessive.’ I know that the only people who think compliance is easy are those that don’t have to do it.
- His three personal priorities for my term are revamping the de novo chartering process, modernizing our transparency & feedback, and harnessing the power of blockchain technology and digital assets. He said he has good news on all three fronts, as the agency has “revamped and streamlined the chartering process”; the agency’s post-examination pilot survey was a success and more CUs are recording their exit interviews; and the agency is in agreement on the need to harness the power of blockchain and digital assets, including putting out guidance.