WASHINGTON–NCUA Board Member Todd Harper told CUNA’s GAC vendor oversight authority and DEI remain important to him, and that looking forward he remains concerned over liquidity, consumer debt and succession planning.
Unlike his two fellow board members who preceded him at GAC, Harper did not touch upon NCUA’s sale of its taxi medallion loan portfolio. Harper had earlier expressed support for some type of public/private partnership on the loan portfolio.
In his remarks Harper told credit unions his four priorities as an NCUA board member remain capital and liquidity; cybersecurity; diversity, equity, and economic inclusion, and consumer financial protection.
Moreover, Harper said he does have some concerns, including the “increasing exposure of our financial system to malware, ransomware, distributed denial of service attacks, and other forms of cyber intrusion, which affect financial institutions of all sizes. The NCUA needs to work with credit unions, their vendors, and service providers to anticipate and protect against these threats. In that regard, the addition of cybersecurity policy staff as part of the agency’s 2020 budget is an important step toward preparedness.”
Harper also said he continues to support giving the NCUA regulatory authority to resume oversight of third-party vendors, an authority opposed by the credit union trade associations.
“Closing this regulatory blind spot would better protect the credit union system from cyber-threats and place the agency on a more level playing field with the other financial institutions’ regulators,” he said.
It would also provide a measure of regulatory relief.”
Other points made by Harper:
Diversity, Equity, Inclusion
According to Harper, “diversity, equity, and inclusion are highly important to the continued health of the credit union system. The NCUA must foster an environment that promotes inclusion, which will lead to economic dignity for all.”
He urged CUs to participate in the diversity self-assessment available at cudiversity.ncua.gov.
Small CUs
Harper called on the agency to support the work of small credit unions, minority depository institutions, and low-income credit unions, which he said “are often the ones reaching the underserved and who face the challenges of increased competition and difficulties in achieving economies of scale.”
Low-Income Designations
Harper said “everyone” must be counted when determining whether a credit union meets the low-income designation, and he wants NCUA to modify its rules to better account for service members who live on military bases, including abroad. He said agency staff is working on the issue and he is hopeful of making a related announcement in the near future.
Consumer Protection
Harper touched on a theme he has emphasized since joining the board, which is consumer protection. He noted the agency has consumer financial protection responsibilities for credit unions with less than $10 billion in assets (beyond which the CFPB oversees compliance). He said the 319 CUs of more than $1 billion in assets have become “complex” and as a result NCUA “needs to refine its approach to consumer financial protection.”
Harper reiterated his call for NCUA to create a dedicated program for supervising for compliance with consumer financial protection matters.
“In doing so, we will better safeguard member interests and ensure that the credit union system lives up to its commitment to serving members,” he told GAC.
Looking Forward
Looking ahead, Harper said he is focused on three things:
- Liquidity and how federally insured credit unions might respond to the next economic contraction. “When a financial institution holds illiquid assets like long-term mortgages, it may have difficulty selling those assets at normal prices to obtain needed cash during times of economic stress,” said Harper. “The NCUA’s rule requiring appropriate risk-management practices to maintain access to liquidity should help credit unions of all sizes to maintain ample access to cash to withstand unexpected emergencies.
- The growth in Consumer Debt. Household debt now tops $14 trillion, including a record $930 billion in credit-card debt. Despite good economic times, he said “some households are running into trouble,” and Harper expressed concerns over what might happen in a recession.
- Succession Planning. Harper said after learning one of the top two reasons cited for credit union mergers is succession planning, he dug deeper and learned about one-in-five credit unions lack CEO succession plans. With many retirements pending, Harper said it’s time for credit unions to learn from the Scouts and “be prepared.”