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NCUA Chairman Todd M. Harper Remarks at the 2023 Inclusiv 2023 Annual Conference “Where Do We Go from Here? Economic Justice and Credit Unions”

May 2023
NCUA Chairman Todd M. Harper Remarks at the 2023 Inclusiv 2023 Annual Conference “Where Do We Go from Here? Economic Justice and Credit Unions”

As Prepared for Delivery on May 2, 2023

Good afternoon, everyone.

And, thank you, Ed, for the kind introduction. Senator Warner is certainly a tough act to follow, but as he is a leading congressional voice for investing in underserved communities, I consider it a privilege. I’m pleased to join you here in Memphis, a place that is a veritable feast for the senses of sight, sound, smell, and taste.

But, besides being a destination for music and barbecue, Memphis is also home to the National Civil Rights Museum, which I visited yesterday afternoon. While the museum beautifully chronicles the trials and triumphs of the civil rights movement, it also reminds us that we, as a nation, must continue working toward the “more perfect union” envisioned by our founders.

In his far-too-short life, Dr. Martin Luther King, Jr., was a tireless advocate for positive social change. And, the minority depository institutions and community development credit unions that Inclusiv has brought together here in Memphis are a part of Dr. King’s legacy of positive social change.

It is the work of your credit union and the other credit union leaders sitting near you today that is paving the path for greater economic opportunity, greater economic equity, and greater economic justice.

2023 Community Development Revolving Loan Fund Grants and Loans

And, it’s the NCUA’s job to ensure that the credit union system fulfills its statutory mission of meeting the credit and savings needs of people, especially those of modest means. Among our most visible and impactful initiatives to achieve that objective are the grants the NCUA awards through Community Development Revolving Loan Fund. The application period for the 2023 grants opened just yesterday, and I strongly encourage all eligible credit unions to apply.

There are two big changes to this year’s grant round. First, at the NCUA’s request, Congress now allows all minority depository institutions, regardless of whether they are a low-income credit union, to receive grants and loans. Second, Congress has more than doubled the funding available for these grants to $3.5 million.

In recent years, the demand for these grants has far surpassed available funds. So, this change is very welcome news. As a result, the NCUA can now award more grants and bigger grants to eligible institutions. And, this year, we are funding grants in five categories, namely underserved outreach, MDI capacity building, consumer financial protection, digital services and cybersecurity, and training.

We also have two more new grant initiatives for 2023. The first is the Impact through Innovation pilot with a maximum award of $100,000. This pilot is squarely targeted at under-resourced communities by focusing on banking deserts, affordable housing, credit invisibles, and fintechs. And, the second new initiative is the Small Credit Union Partnership pilot with a maximum award of $50,000 that will assist small credit unions in pooling resources to realize economies of scale and achieve their growth objectives.

Both grant initiatives will help institutions that support under-resourced communities to innovate and negotiate the challenges of an uncertain economic future. For interested credit unions, the 2023 grant application period ends on June 30. I encourage all eligible credit unions to apply so that we can maximize the impact of these funds. Additional information is available online at

Small Credit Union Access to Subordinated Debt

To support and preserve small credit unions and MDIs, the NCUA must also create the right environment for their success, and that includes facilitating access to capital through the agency’s subordinated debt rule.

Over the last year, we have heard Inclusiv’s concerns about the utility of the NCUA’s subordinated debt regulation. And, it’s why the NCUA Board amended the NCUA’s rules to unlock the full potential of the Emergency Capital Investment Program for minority depository institutions and community development credit unions by allowing them to accept this capital for 30 years instead of just 15 years. It’s why the NCUA modified its rules to make the regulation more user-friendly and increase flexibility for credit unions, such as clarifying the requirements for who can conduct a legal review of the underlying agreements. And, it’s why the NCUA is now working to ensure that non-complex, bilateral secondary capital deals for low-income credit unions continue with minimal friction.

We anticipate receiving secondary capital applications from several Inclusiv members in the coming weeks so that we can test these new procedures to ensure that they will work as intended. Going forward, I’m also pleased to report that the NCUA will post materials and templates for low-income credit unions to use in bilateral agreements. These resources will be available for credit unions on in the coming months.

Additionally, I know Inclusiv administers a $20 million Racial Equity Investment Fund to deploy secondary capital investments at MDIs. With the same 2-percent interest rate as the Emergency Capital Investment Program, these funds would advance financial inclusion efforts within communities of color. Yet, none of these funds have been deployed. Which is why the NCUA is committed to exploring additional ways to expedite the release of this funding. After all, the money that gets deployed as secondary capital at low-income credit unions can do much more to improve under-resourced communities than the money that sits, attracting dust in a vault and accruing limited interest.

Interest Rate Ceiling

That brings me to another point. The maximum loan interest rate ceiling for federal credit unions is another regulatory issue that has recently garnered great attention. In January, the NCUA Board extended the temporary 18-percent ceiling that has been in place since 1987, effective through September 10, 2024.

Some industry stakeholders proposed raising the interest rate ceiling beyond 18 percent to as much as 21 percent. Others advocated for a floating interest rate ceiling. Inclusiv, however, has properly noted that an increased interest rate ceiling would put greater strain on the households who hold debt, such as credit card debt, and tip some family budgets into the red. And, I have not heard a compelling argument that raising the interest rate ceiling would increase access to safe, fair, and affordable credit for families.

If the interest rate ceiling must be raised for credit unions to underwrite consumer credit cards, perhaps credit unions should instead limit costly rewards programs and other expensive secondary benefits. Working families and young military recruits with less money and resources in these uncertain times should not be forced to subsidize elite rewards programs by paying higher interest rates. So, Cathie and I fully agree on this issue: It is inequitable and unnecessary to raise the interest rate ceiling at this time.

In fact, Cathie, I quoted your Credit Union Times op-ed in my statement on this topic at the NCUA’s April Board meeting. You truthfully, accurately, and persuasively articulated my thoughts and concerns. If the credit union system is to remain faithful to its statutory mission of supporting the credit and savings needs of all Americans, especially people of modest means, we must never lose sight of who ultimately bears the weight of these interest rate ceiling decisions.

Customized Examination Procedures for Minority Depository Institutions

Finally, strategic and productive engagement have long been a pillar of my regulatory philosophy. And, in meeting with credit unions, I have often heard about how difficult it is to compare MDI performance to other comparably sized non-MDIs during the examination process. Through the NCUA’s work on the Federal Financial Institutions Examination Council, I also learned that other federal banking agencies do not use non-MDI peer metrics when assessing MDIs.

After all, the unique business models of MDIs often allow for higher expenses and higher delinquencies when compared to federally insured credit unions overall. The imbalance created by measuring MDIs with metrics intended for other credit unions can have a negative effect on MDI operations and development. And, it can lower an MDI’s CAMELS rating. Using peer metrics to compare an MDI to a non-MDI in the same asset class is like comparing an apple to an orange. It makes little sense.

So, to give MDIs a more constructive basis for comparison, the NCUA started using new procedures to examine MDIs this year. These procedures are tailored to the unique business models of MDIs. Using a job aid designed for this express purpose, examiners will have customized guidance and gain greater insight into MDI credit unions’ strategies and member needs.

The new MDI-specific procedures represent an important evolution of the examination process. Ultimately, the payoff is in not only giving the NCUA a more accurate picture of an MDI, but in providing MDIs with useful metrics to benchmark their work against their true peers, and in the process, enhance their service to members and under-resourced communities.


With that all said, let me now close by revisiting my National Civil Rights Museum experience. On April 3, 1968, the day before he died, Dr. King delivered his now-famous mountaintop speech. In those remarks, Dr. King spoke of getting to the promised land, a place where there is equality, equity, and opportunity for all and in all aspects of life.

It’s your work as minority depository institutions and community development credit unions that is getting us to that promised land of financial inclusion. It’s your work that is getting us to the promised land where we will close the racial wealth gap. And, it’s why the NCUA is working to enhance our fair lending supervision and root out racial bias in home appraisals and automated valuations.

Dr. King has passed the baton to us so that we might one day get to the promised land of which he spoke. We have, without question, made strides in advancing financial security and opportunity within the credit union system that we should take collective pride in.

But, there’s plenty of work left to do. And, forums like the annual Inclusiv conference, inspire us to pursue Dr. King’s vision of true, lasting, and durable economic justice. I am honored to join you at this meeting and in the quest for greater financial inclusion.

And, Cathie, as always, I look forward to our conversation. Thank you, all.

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