As Prepared for Delivery on June 25, 2020
Hello, everyone. Thank you all for having me today. And thank you to Dan Berger and NAFCU for the continued commitment to members amid the COVID-19 pandemic. Your efforts make a powerful statement about this industry’s safety, soundness, and commitment to service.
There’s no question that recent months have been a time of tremendous uncertainty and challenge. The COVID-19 pandemic and response has severely disrupted every aspect of American life. 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.
And as we all recognize, 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.
Against that backdrop of challenge and uncertainty, the events of recent weeks — with the tragic death of George Floyd in a Minneapolis police encounter and the wide-scale demonstrations against abuse of authority that have followed — are all the more disheartening. What we’ve witnessed unfolding in our communities, and seen reported in the media, has sparked some very strong emotions and reflections.
Within the NCUA we’ve worked to make a priority of encouraging diversity, equity, and inclusion, but we all understand that the change must go beyond what any government agency can do — what is needed is a deeper and broader cultural change that fosters true understanding and acceptance. Those are goals that I look forward to working with all of you to advance.
To that point, I encourage credit unions complete the Annual Voluntary Credit Union Diversity Self-Assessment, to help them address diversity and inclusion challenges. The Self-Assessment lists a set of best practices for assessing your workforce development, your procurement practices, your transparency practices, and so forth. It can also give you a fuller and more objective picture of how your institution is meeting its diversity targets, or how you might improve in your inclusion efforts.
I’ve had the chance to speak with a number of you over the last couple of months. What I’ve heard from speaking with leagues and credit unions, and what I’ve witnessed myself, has been equally encouraging. While making necessary adjustments to your service models — like encouraging use of online options and routing customers to drive-thru services to limit potential exposure — credit unions have shown foresight and prudence while providing critical financial services to your members.
As you are aware, I have made it clear that regulatory relief is one of my top priorities. 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. 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.
On the longer-term economic impact front: I have assigned a team to analyze the economic impact on your institutions, 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.
Numerous Communications to the Industry
The agency has issued a number of Letters to Credit Unions. These letters addressed topics such as our supervision priorities and examination programs, regulatory relief, working with borrowers, the Central Liquidity Facility, the SBA’s Paycheck Protection Program, and the CARES Act.
NCUA also issued Regulatory Alerts addressing compliance issues and regulatory changes during the pandemic, and a Risk Alert addressing cybersecurity considerations for remote work. NCUA has also participated in the issuance of several Interagency Statements this year. These statements addressed topics such as small-dollar lending, loan modifications, appraisals, and pandemic planning.
NCUA added a COVID-19 section to our public-facing website to provide stakeholders with easy access to relevant information. The site provides links to both credit union and consumer FAQs, as well as other relevant resources and recent communications. The site is updated frequently to address industry needs.
Central Liquidity Facility
Since the COVID-19 emergency began, the NCUA has taken steps to protect our staff's safety and execute our core mission as effectively and efficiently as possible in our current remote posture. NCUA examiners and staff stand ready to work with the credit unions as they respond to these unusual and challenging circumstances.
If your credit union needs to make a policy adjustment to meet the needs of borrowers facing financial stress, we want to give you the flexibility you need. If your credit union deems it prudent to ease loan terms to help a member through this difficult time, we’ll try to work with you. The bottom line is that we want your institutions to be able to respond to the needs of your members, your employees, and your communities in the best way you know how.
One way we’re doing this is through the Central Liquidity Facility, a mixed-ownership government corporation that exists within the NCUA and serves as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls.
I worked with Congress to ensure key changes to the CLF were included in the Coronavirus Aid, Relief, and Economics Security Act, which was signed into law on March 27. The NCUA Board also took several actions in April to improve the CLF’s flexibility and strength. These actions included eliminating the six-month waiting period for a new CLF member to receive a loan and easing the period for how long a member must wait to receive back their paid-in capital if they should choose to terminate their CLF membership.
Liquidity, like capital, is a pillar of strength upon which our system rests. This is true during any economic or financial disruption, and we know how important it is for credit unions to continuously have unfettered access to contingency funding if and when the need arises. Because the CLF is a proven solution for individual credit unions and for helping to stabilize liquidity throughout the credit union system, I have asked Senate Banking Chairman Crapo to make these changes permanent.
Paycheck Projection Program Loans
Credit unions have also been able to provide guaranteed loans to businesses and self-employed individuals through the U.S. Small Business Administration’s paycheck protection program. This will permit credit unions to assist members with payroll, benefits, and other eligible expenses.
I spoke with a credit union that was able to provide a PPP loan to a minority barbershop in rural Alabama. Similarly, in Mississippi, a historically black college received a PPP loan from a credit union after not being able to secure a loan from any other financial institution.
EXIM Memorandum of Understanding
We all know there are tremendous financing opportunities available for small businesses through various government grant programs, loan programs, and so forth. But for many entrepreneurs, it can be difficult to know where to start to gain access to those programs.
Under a recently signed agreement with the Export-Import Bank, we’ll be working with EXIM to develop educational and training initiatives on export financing opportunities to share with credit unions, so they can educate their small-business members about the available opportunities, such as an EXIM guaranteed loan being exempt from the member business cap of 12.25 percent. Helping small businesses to gain access to capital is essential, and we can anticipate that this collaboration will be a great help to many hard-pressed entrepreneurs, particularly the steep challenges they face in today’s environment.
While the pandemic emergency, and the attendant economic fall-out, has generated significant uncertainty, we can be confident we have the tools to respond effectively.
Taking carefully considered actions now to keep the financial system functioning properly will pay dividends in helping us to get past the present emergency and move the economy toward recovery — a process we all hope can begin sooner rather than later.
The last time I was at NCUA as Vice Chairman, we were facing a global economic crisis, and the most significant recession our nation had faced in decades.
I think all of us who were around back then can recall the uncertainty we were dealing with. And we had little sense of what we might expect for the credit union industry, not to mention for the U.S. economy as a whole.
As an astonishing testament to the resiliency of the American economy and the American worker, and the American spirit of entrepreneurship, the credit union industry came back stronger than ever.
When this situation is resolved, I want everyone here to be able to say that we all held fast to the industry’s long and honorable tradition of “people helping people.” It is in times of trial like these that we best understand that those words are more than a slogan — they represent a strong commitment to your members and your communities, a commitment that we will strive to honor every day.
Thank you again for having me.