ALEXANDRIA, Va.—The outlook is getting better for both the credit union system and the country as a whole, according to NCUA’s chairman.
During a Town Hall Meeting with the Maine Credit Union League, NCUA Chairman Todd Harper said the coronavirus pandemic continues to present challenges, but there remains reason for optimism.
“The recently enacted $1.9 trillion American Rescue Plan Act will help shore up household finances and is expected to give the economy a substantial boost,” Harper told the virtual event. “The return of warmer weather and rising number of Americans who have been vaccinated should also spur increased economic activity and job creation in the months ahead.”
But even with these improvements, Harper cautioned Maine’s credit unions that it would take time for the economy to fully recover, and credit unions “face a prolonged period of very low interest rates.”
“In the year ahead, your credit union’s ability to manage interest-rate risk will play a crucial role in financial performance,” he added.
Reputational Risks
Harper also discussed the practice by some financial institutions, including credit unions, of garnishing economic stimulus payments due to debts by some members.
“As we saw with stimulus payments last year, some credit unions decided to garnish these funds instead of stepping up and working with their members,” Harper said. “Credit unions that do this again should consider the reputational issues that will come from these practices.”
Harper, who joined others in referring to credit unions as “financial first responders,” said credit unions should protect member’s relief payments from collection, garnishment and the right of offset. He further urged CUs to demonstrate the cooperative philosophy at the heart of the credit union movement.
Failing to accommodate members’ needs during tough economic times, Harper said, will sacrifice a credit union’s long-term financial viability and create negative publicity for the entire credit union system.
“All credit unions should heed the lyrics of Bill Withers who sang, ‘Lean on me, when you’re not strong, and I’ll be your friend. I’ll help you carry on,’” Harper said. “Credit unions that follow this wise, timeless advice will serve their members, themselves, the credit union system, and our economy well in the long term.”
Overall State of Industry
During the Town Hall, Harper also discussed the state of the CU industry, NCUA’s response to COVID-19, consumer financial protection, and economic equity and justice.
Harper reminded the NCUA COVID-19 Resource Center includes answers to frequently asked questions on economic impact payment and stimulus checks. It includes FAQs for federally insured credit unions and FAQs for credit union members.
Harper’s full remarks are available on the NCUA’s website.