ALEXANDRIA, Va.–NCUA Board Member Todd Harper said he and the agency will be paying particular attention to credit union liquidity in the second half of the year, while he separatelycalled on the NCUA and the credit union industry to take action to advance economic equality and justice.
In an interview with CUToday.info, Harper said credit unions can expect to see ongoing compression of net interest margins, and despite the pandemic’s effect on the economy, he stressed CUs must ensure they remain focused on lending.
“I am watching credit risk and liquidity as we go forward. A lot of money has flowed into credit unions, but a lot of that is going to flow out,” he said. “I will be watching Q3 and Q4 very closely.”
Lending Focus Necessary
In terms of lending, Harper pointed to a study done by Inclusiv of credit unions during the financial crisis of a decade ago that found those CUs that leaned into lending during the crisis performed better than other peer group CUs that were less focused on making loans.
In addition, he said the latter half of the year and early 2021 will mean CUs having to make decisions related to how they responded to members in need as a result of the pandemic.
“There is a lot of forbearance activity, and at some point credit unions are going to need to reassess. Many members who got forbearances are going to be going back to work, but others are going to need workouts,” he said.
Economic Equality
Separately, during the Illinois Credit Union League’s Virtual Town Hall Meeting, Harper urged NCUA and the credit union community to take action to advance economic equality and justice.
“Civil rights and human rights are core American values, and I fully embrace them,” Harper said. “I also believe deeply in equality. That’s why the brutal killing of George Floyd shocked and sickened me. For the African American community, the circumstances of Mr. Floyd’s death are unfortunately far too familiar. As a leader at the NCUA, I cannot respond by just saying, ‘we need to do better’ or ‘we must do more.’ Those lines rightfully ring hollow to communities of color. They are empty promises. To achieve real, sustainable change, I, like each of us, must take action within my sphere of influence.”
Four Prongs
Harper used his remarks to outline four initial approaches he said he is working to advance as a member of the board, including:
- Building diverse and inclusive workforces and supplier chains
- Enhancing support for minority depository institutions
- Enforcing fair lending laws
- Funding initiatives aimed at closing the wealth gap
In addition, Harper detailed his experience learning about credit unions’ efforts around the country to meet their members’ needs and develop innovative initiatives aimed at creating economic equity and opportunity. He stressed that credit unions that engage with their communities would be remembered and supported for their efforts.
More Inclusion Needed
He again called on the credit union system to push for greater financial inclusion.
“To address long-standing societal problems of economic equality and justice, we need you to recommit to addressing these issues in your communities by finding ways to adapt your products and services,” Harper said. “In serving everyone, your credit union, your members, and our country will be better for it. You will also be fulfilling the “people helping people” philosophy at the heart of the credit union movement.”
During his remarks, Harper also invited those credit unions that are not already members of NCUA’s Central Liquidity Facility to take advantage of the CLF.