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NCUA Board Member Todd M. Harper Letter to the Senate Banking, Housing and Urban Affairs Committee on COVID-19 Response

The opinions expressed herein are my own, and they do not necessarily reflect those of the NCUA, the NCUA Board, or any other NCUA Board Member.

May 4, 2020

The Honorable Mike Crapo
Committee on Banking, Housing and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Sherrod Brown
Ranking Member
Committee on Banking, Housing and Urban Affairs
United States Senate
534 Dirksen Senate Office Building
Washington, DC 20510

Dear Mr. Chairman and Ranking Member Brown:

As Congress considers additional reforms that build upon the provisions contained in the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, I write to offer my recommendations for further legislative action. These proposals will better equip the NCUA to both contain the pandemic’s economic impact on credit union members and the credit union system, and also protect consumers. Accordingly, I respectfully request your consideration of the matters outlined below.

Extend the Sunset of the CARES Act Central Liquidity Facility Enhancements. The temporary changes and increased flexibilities made by Congress to the NCUA’s Central Liquidity Facility, or CLF, in the CARES Act, are very helpful. As the economic contraction continues, we can expect credit unions’ liquidity needs to rise. Those liquidity needs may spike after the current expiration date. For that reason, I urge you to make the CLF provisions in the CARES Act permanent. Permanence would provide regulatory certainty during the current crisis and bolster the credit union system’s ability to respond to future emergencies.

In the alternative, I recommend that you extend the CLF provisions by a minimum of one year, to December 31, 2021. The extension would provide the system with a sustainable source of liquidity during the COVID-19 pandemic and the ensuing economic uncertainty that seems likely to continue well into 2021, and perhaps beyond.

Protect Economic Impact Payments from Garnishment. As you know, in the last six weeks, more than 30 million Americans have filed for unemployment, and a recent survey found that more than three-quarters of households have experienced a decline in income because of COVID-19. What is more, nearly 4 in 10 families are now uncertain about how they will pay for recurring monthly bills.

To assist Americans struggling to make ends meet, Congress sensibly provided for Economic Impact Payments in the CARES Act. COVID-19 financial relief issued by the federal government to consumers helps pay their mortgage or rent and covers expenses for food, utilities, and medical care. Such payments, however, are not currently protected from garnishment. In the CARES Act, except for child support, Economic Impact Payments are exempt only from offsets for federal and state agencies.

Unfortunately, some depository institutions have garnished Economic Impact Payments to cover outstanding debts and court-ordered judgments. Financially stressed American consumers deserve much better. That is why I urge you to provide legal certainty and to clarify that federal financial relief is safe from garnishment.

Increase Funding for Community Development Revolving Loan Fund Emergency Grants. Emergency grants provided through the NCUA’s Community Development Revolving Loan Fund, or CDRLF, are supporting the pressing needs of 2,605 low-income credit unions, including many minority depository institutions. Together, these low-income credit unions offer responsible products and affordable services to 56.3 million members.

The NCUA has experienced a strong demand for its COVID-19 emergency grants. Because demand already exceeds the amount of available funds for these emergency grants, I urge you to quickly appropriate at least $10 million more for CDRLF grants in 2020. The additional funding would allow the NCUA to increase the size of its grants, award more grants, and facilitate the efforts of low-income credit unions to adjust their operations, preserve capital, better serve their members, and effectively respond to the many state stay-at home orders and social distancing mandates presently in place to fight the spread of COVID-19.

Exempt All Member Business Loans from the Statutory Cap during the COVID-19 Emergency. America’s small business owners and employees have faced sizable losses in revenue and wages, respectively, because of COVID-19. The Paycheck Protection Program was created by Congress to mitigate some of these negative economic consequences, but I advocate for doing more.

To provide greater access to affordable credit for small businesses and keep the economy going through these tough economic times, I urge you to exempt all federally insured credit union member business loans made from the start of the COVID-19 public health emergency through December 31, 2020, from the statutory member business lending cap. Relief from the business lending cap will help credit unions make more loans to the Main Street small businesses that they serve, and facilitate an economic recovery.

Permit All Federal Credit Union Charter Types to Add Underserved Communities. Underserved communities have been especially hard hit by the COVID-19 pandemic. Consistent with the NCUA’s long-standing legislative objective, all federal credit union charter types should be allowed to add underserved areas to their field of membership. Presently, only multiple common-bond credit unions may add underserved areas.

This statutory adjustment would allow single common-bond and community charters to add underserved areas to their field of membership as well. That would provide more Americans in underserved communities access to safe financial products and services, and affordable credit.

Provide NCUA with Vendor Authority. Most credit unions rely on vendors to conduct important parts of their operations. Yet, as credit unions respond to COVID-19 issues, they have little time to address problems that may arise with those vendors. Many also lack the resources required to fully conduct due diligence when adding new vendors to address COVID-19 needs. At present, the NCUA lacks the authority to supervise or oversee credit union third-party vendors, even though the Government Accountability Office and Financial Stability Oversight Council have long urged Congress to close this regulatory blind spot. I respectfully request that you provide the NCUA with this oversight authority now. In making this change, the NCUA would achieve parity with the federal banking agencies, which already have vendor oversight authority.

Simply put, the NCUA needs the authority to supervise the entities that are providing credit unions with services, like access to the Paycheck Protection Program. This statutory change would better protect credit union members and ensure the safety and soundness of the credit union system.

Maintain Capital Standards. In response to the COVID-19 crisis, some have advocated for temporary reductions in the capital standards for federally insured credit unions. Although such statutory changes would provide regulatory relief in the short term, they could also lead to a false sense of security and prevent the agency from taking timelier actions to prevent losses. Thus, reductions in capital standards could ultimately lead to greater losses for the Share Insurance Fund, which all surviving federally insured credit union members would need to pay. To protect taxpayers, I recommend that you refrain from taking any action on changing statutory capital levels at this time.

Thank you for considering these legislative requests. While we will likely have many difficult days and more economic turbulence ahead of us, together we will get through the pandemic by focusing on the needs of credit union members and other consumers. Should you have any questions about these matters, please contact me, or have your staff contact Catherine Galicia, my Senior Policy Counsel, at or 703.213.8631.



Board Member


The letter was sent to the U.S. House Committee on Financial Services

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