NCUA Vice Chairman Kyle S. Hauptman during a meeting of the NCUA Board.
As Prepared for Delivery on November 21, 2024
This quarter, the Fund’s net position increased, with a reported net income of over $72 million. On the other hand, unrealized losses have decreased by nearly $469 million since last quarter. As short-term interest rates have fallen a bit lately, our unrealized losses have also decreased. Both of those are good things for the Fund.
The Fed has lowered rates by 75bps in the last few months, and it’s currently around 50/50 that the Fed will lower rates another quarter-point next month. And while inflation has fallen, inflation still feels like the houseguest that stays way too long. It’s now been 44 consecutive months with inflation above the Fed’s 2% target rate.
In any event, NCUA is keeping its overnight holdings at $5.5 billion and investing new money back into our bond ladder.
There is also no change in the Normal Operating Level at this time. As a reminder, the NOL was last set and approved by the Board in December 2021 at 1.33 percent, reduced from 1.38 percent. Thus far, that change hasn’t affected distributions since the SIF hasn’t had enough money where we’d have sent money back to credit unions in either scenario. In 2025, a NCUA staff working group will prepare a public notice to seek comment on modifications to the NOL. If you or your trade group would like to weigh in on this issue, I recommend preparing in advance.