WASHINGTON–NCUA Board Member Todd Harper addressed two groups here this week with a message that learning from the past but focusing on the future is essential to meeting a period of significant change, especially with warning signs dotting the landscape.
In remarks to a Women in Housing and Finance Policy event and then a day later to NAFCU’s Congressional Caucus, Harper said America’s credit unions, the NCUA, and the financial system at large face a variety of risks as the financial and social environment undergoes rapid change.
“We need to be fair and forward-looking; innovative, inclusive, and independent; risk-focused and ready to act; and appropriately engaged with all stakeholders,” Harper said. “We need to have foresight for the year 2020, not just 20/20 hindsight. While it’s important to develop new rules and revise old ones based on lessons learned in the last crisis, it’s equally important to look ahead at risks coming over the horizon.”
Harper echoed remarks he made earlier this year when he was the dissenting vote in a 2-1 vote by the NCUA board to further delay its risk-based capital proposal until 2022, saying there are signs of a potential recession, and he stressed the need to be forward-looking.
“For the NCUA, it follows that we must ensure that federally insured credit unions and the Share Insurance Fund have the capital needed to withstand the next downturn,” he said.
As an example, he cited the more than quarter-billion-dollar hit the insurance fund took as the result of failed taxi medallion credit unions.
“[I]t is time for us to move ahead to protect the Share Insurance Fund before there is a problem, rather than assessing premiums after the fact as we did during the Great Recession,” Harper said.
Safety, Soundness, Consumer Protection
Looking forward, Harper said his areas of concern are related to safety, soundness and consumer protection.
“One of my priorities is to safeguard the safety and soundness of federally insured credit unions,” Harper said. “I am keenly focused on issues of capital and liquidity and on cybersecurity.
“The NCUA also has consumer financial protection responsibilities for credit unions with assets of less than $10 billion,” he continued. “The credit union system has a mission to promote thrift and serve people of modest means. Consistent with the law, we need to work to increase uniformity in our consumer financial protection supervision.”
During his remarks, Harper listed several areas where he said change will be accompanied by risk. He said areas of concern include:
- Rising consumer debt. Consumer debt has reached a record $4 trillion, and credit unions need to carefully evaluate risks when making new loans and hedge risks appropriately.
- Deficits and national debt. A large and growing national debt creates significant uncertainty.