ARLINGTON, Va.—Saying there’s “no question” recent months have been a time of tremendous uncertainty and challenge, NCUA Board Chairman Rodney Hood said the agency is taking steps to help the industry cope and how he hopes some of the changes could be lasting.
Those steps include working with Congress to raise, and potentially eliminate, the member business lending cap for credit unions, he told NAFCU’s State of the Industry Virtual meeting.
“The COVID-19 pandemic and response has severely disrupted every aspect of American life,” Hood said. “We are certainly hoping the pandemic’s extent and impact may ultimately prove to be less severe than was initially feared, thanks in part to a strong public health response. However, we know that the threat remains real, and we have a way to go until things return to normal.”
Unprecedented Damage
Hood noted the economic damage from the pandemic has been almost unprecedented in its scope and speed.
“We’ve seen valiant efforts at every level—Congress, the executive branch, state and local officials, the business community, the credit union industry, America’s workers—to respond to this unforeseen economic shock the best we can,” he stated.
Hood again emphasized regulatory relief is atop his list.
“That remains a priority, and the current situation underscores why it matters. I’ve assigned a team to examine additional prudent regulatory relief to help credit unions deal with the impact of the pandemic,” Hood said. “In the meantime, we do not plan to introduce any new rules that would create further burdens now or in the recovery period to follow. We want you to have maximum flexibility to respond to your members needs so that, once the crisis is past, we can get the economy up and running as quickly as possible.”
The Longer Term
In terms of the longer-term, Hood said he has assigned a team to analyze the economic impact on CUs, especially with respect to liquidity.
“Obviously, this will have to be a work in progress, but if we start gathering data and assessing the initial impact now, it will position us respond more rapidly and appropriately when the crisis passes,” he said.
During a Q&A with NAFCU President Dan Berger, Hood shared his desire to assist credit unions in helping their communities rebuild after the pandemic passes by raising the MBL cap, and possibly eliminating it.
“I want credit unions to be able to make business loans to entrepreneurs. I don’t want them bound by the MBL cap of 12.5%,” said Hood, who noted he made the request to raise the cap to 20% to Senate Banking Committee Chairman Mike Crapo (R-ID). “I’d love for the cap to be erased. Why hinder credit unions that really want serve members and help them keep their jobs.”
Changing Definition
Hood also noted NCUA wants to work with Congress to allow credit unions to extend their ability to serve underserved areas, saying the pandemic has driven greater use of digital services and in the process changed the definition of “reasonable proximity.”
“We are looking into how we can address this issue,” Hood said.