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NCUA Board Member Todd M. Harper Remarks at CUNA’s Examination and Supervision Committee Meeting on NCUA’s Response to the COVID-19 Pandemic

May 2020
NCUA Board Member Todd M. Harper Remarks at CUNA’s Examination and Supervision Committee Meeting on NCUA’s Response to the COVID-19 Pandemic

As Prepared for Delivery on May 21, 2020

Thank you for inviting me to speak, and thank you for being America’s financial first responders. Your work on the frontlines of the COVID-19 pandemic is protecting the financial health of tens of millions of Americans.

Consistent with safety and soundness and consumer financial protection, I encourage you to continue to develop products and services aimed at helping families pay for essential needs. By focusing on your members, making responsible loans, accommodating their needs, your members will remember it in the long term.

Before we get to questions, I would like to briefly discuss the economy and highlight some of the things the NCUA is working on in response to the pandemic.

Economic Overview

Without question, the recent economic news has been startling. The measures necessary to combat the spread of coronavirus have caused economic activity to plummet and layoffs to surge. In just nine weeks, 38.5 million Americans have filed for unemployment.

The sharp and rapid deterioration in labor market conditions, lost wages, and heightened uncertainty that is sure to linger even after normal economic activity resumes means the economy may not return to its pre-coronavirus level of output for quite some time. In short, the economic news is sobering.

Summary of NCUA’s Priorities

As the COVID-19 pandemic has transpired, the NCUA has pursued three priorities. Our first priority is to protect the health and safety of NCUA staff and contractors, so that we can maintain our ability to perform the agency’s mission and complete its essential functions.

Our second priority is assessing the impact of COVID-19 on credit union members and operations. The NCUA has a dedicated webpage at that provides guidance on dealing with pandemics, answers your frequently asked questions, and offers information on working with members. In our initial assessment of the operational needs and performance of the credit unions, we generally found that federally insured credit unions are open, lending, and serving their members’ needs.

Our third priority is to assess how COVID-19 will affect the financial condition of credit unions going forward so that we can allocate staff resources and protect the Share Insurance Fund, which safeguards the deposits of 120 million Americans.

Central Liquidity Facility

Through my experiences in working on Capitol Hill during the last financial crisis, I knew disruption in the financial markets could quickly turn into liquidity shortfalls.

Because credit unions need to have access to liquidity when other parts of our economy freeze up, in mid-March I called on the NCUA to seek legislation to enhance the capacity and powers of the Central Liquidity Facility, or CLF. Congress acted quickly to adopt those temporary enhancements as part of the CARES Act at the end of March, and the NCUA Board approved a rule to implement these changes in April.

The CARES Act temporarily makes it easier for credit unions to join the Central Liquidity Facility, including corporate credit unions to act as agents for consumer credit unions as they once did before the 2008 financial crisis. The law also eased some restrictions around getting a liquidity loan and temporarily increased the capacity of the Central Liquidity Facility from 12 times the CLF’s capital to 16 times its capital through the end of 2020.

Ultimately, we have a vital opportunity to significantly bolster the entire credit union system’s access to external liquidity for the remainder of the year. But, we need to move quickly to capitalize on our new expanded flexibilities and position ourselves ahead of emerging needs.

For these reasons, I strongly encourage all consumer credit unions that do not already belong to or have access to an agent for the Central Liquidity Facility to join as soon as possible. By joining the CLF, you will be demonstrating the best of the cooperative nature of the credit union movement. That is because every member who joins the Central Liquidity Facility will exponentially increase the capacity of the CLF to provide liquidity to others within the system.

Even if your credit union ultimately does not use the CLF in the coming months, your support for the CLF may help another credit union with significant liquidity needs to survive. To learn more about the CLF and how to join, go to

Other NCUA Responses

As the COVID-19 pandemic has unfolded, the NCUA has actively worked to protect credit union members, provide regulatory relief, and inform credit unions about potential economic problems and financial sector developments. In all, the agency has issued more than a dozen letters to credit unions and risk alerts in just over two months. I would like to summarize a few of them.

One of these letters provided assurance that the NCUA’s examiners will not criticize your credit union’s efforts to provide prudent relief for members when such efforts are conducted in a reasonable manner with proper controls and management oversight. A credit union’s efforts to work with members in communities under stress may contribute to the strength and recovery of these communities.

Another letter outlined the NCUA’s offsite supervisory and examination approach for the duration of the COVID-19 pandemic. We have also made it easier for federal credit unions to hold annual meetings virtually and provided relief in other ways like temporarily allowing credit unions to defer appraisals and written estimates of market value for up to 120 days after the closing of a loan.

Through the Paycheck Protection Program, credit unions are working to save and create jobs. That is why I recently voted for the NCUA Board’s interim final rule to ease regulatory burdens and capital requirements for credit unions making these loans.

And at today’s Board meeting the NCUA Board adopted a rule to amend the prompt corrective action requirements in two ways. The first of these amendments will waive the earnings transfer requirement for credit unions that fall from well capitalized to adequately capitalized. This change will allow the credit union to use the capital to help their members.

The second change creates a streamlined net worth restoration plan for credit unions that become undercapitalized because of an inflow of shares. These share increases are temporary and will leave the system as the millions of Americans who are experiencing economic hardship withdraw the funds to cover living expenses.

Both the earnings transfer waiver and the net worth restoration plan provisions will expire at the end of 2020.

Closing Comments

In closing, the NCUA will continue to focus on protecting credit union members and ensuring the safety and soundness of the credit union system.

In return, we need you to stay focused on serving your members. In the long term, they will remember who supported them during their times of need. In the months ahead, because interest rate drops and compressed interest margins, you also need to watch expenses.

And, if you are experiencing problems, please contact your examiner or field office. Your timely call to the NCUA may help your credit union to survive in the long term.

Thank you again for inviting me. I look forward to your questions.

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