ALEXANDRIA, Va. (March 23, 2021) – Although the COVID-19 pandemic continues to pose challenges for the country and the credit union system, the economic outlook has recently improved, National Credit Union Administration Chairman Todd M. Harper said yesterday during the Maine Credit Union League’s Town Hall Meeting.
“The recently enacted $1.9 trillion American Rescue Plan Act will help shore up household finances and is expected to give the economy a substantial boost,” Chairman Harper said. “The return of warmer weather and rising number of Americans who have been vaccinated should also spur increased economic activity and job creation in the months ahead.”
Harper’s remarks are available on the NCUA’s website.
Even with these improvements, Harper cautioned that it would take time for the economy to fully recover, and credit unions “face a prolonged period of very low interest rates.” He added, “In the year ahead, your credit union’s ability to manage interest-rate risk will play a crucial role in financial performance.”
Consider the Reputational Risks before Garnishing Stimulus Payments
Harper also discussed the practice by some financial institutions, including credit unions, to garnish economic stimulus payments, calling this a very important subject.
“As we saw with stimulus payments last year, some credit unions decided to garnish these funds instead of stepping up and working with their members. Credit unions that do this again should consider the reputational issues that will come from these practices,” Harper said.
Harper referred to credit unions as financial first responders who should protect member’s relief payments from collection, garnishment, and the right of offset, and he urged them to demonstrate the cooperative philosophy at the heart of the credit union movement. Failing to accommodate members’ needs during tough economic times will sacrifice a credit union’s long-term financial viability and create negative publicity for the entire credit union system, Harper said.
“All credit unions should heed the lyrics of Bill Withers who sang, ‘Lean on me, when you’re not strong, and I’ll be your friend. I’ll help you carry on,’” Harper said. “Credit unions that follow this wise, timeless advice will serve their members, themselves, the credit union system, and our economy well in the long term.”
Chairman Harper’s remarks also included a discussion of the credit union industry, the NCUA’s response to COVID-19, consumer financial protection, and economic equity and justice.
The NCUA COVID-19 Resource Center includes answers to frequently asked questions on economic impact payment and stimulus checks. It includes FAQs for federally insured credit unions and FAQs for credit union members.