As Prepared for Delivery on June 24, 2021
Thank you. I would like to begin by making some introductory remarks. Just stop to think back to where we were this time just 12 months ago. In June of last year, the COVID-19 pandemic was raging, with case numbers, hospitalizations, and deaths rising rapidly all over the world. Uncertainty and anxiety were rampant, as medical professionals were still struggling to identify effective treatments, and it was believed that a vaccine was likely years away.
Meanwhile, the pandemic dealt a crippling blow to our economy, with a sudden and massive increase in unemployment — I’ll remind you the jobless rate was over 11 percent in June of last year — coupled with a drastic decline in GDP. Adding to the challenge, we were facing a serious moral reckoning in the weeks after the killing of George Floyd in Minneapolis, as people flooded the streets to demand change. In the most extreme cases, our cities faced civil unrest and even violence.
Our nation has faced many challenges in our lifetimes, but few compare to what was unfolding before our eyes this time last year.
Mr. Chairman, as we talk about moving from risk to resilience as more and more Americans become vaccinated, it is a timely lesson, because we’re living it today. And when you look at some of the trend lines for credit unions we’ve seen in the last few weeks, we see proof positive of what that resilience means in the real world.
For example, in the last quarter federally insured credit unions reported net income growth of $11.3 billion, an increase of 134.9 percent over the year ending in the first quarter of 2021. Insured shares and deposits rose $286 billion, or 22.4 percent, to $1.56 trillion over the same period. We’re also seeing steady loan growth and lower delinquency rates. These are strong performance numbers that we can agree reflect a recovery in progress. There are many positive trends credit unions should be proud of.
And as credit unions and the overall economy recover, I am calling on the NCUA Board to institute an Advisory Board. It’s more important now than ever that we hear directly from credit unions. We need to do a much better job getting on the ground feedback directly from credit unions in a formal setting where credit unions do not feel they will be reprimanded for giving honest feedback. This issue also gets to the Vice’s Chairman’s feedback loop survey following exams, and that is an initiative that I also fully support.
To my knowledge, the other financial regulators have Advisory Boards.
As I have also said before, it's interesting to note that today we're contemplating a renewal of the temporary maximum loan rate of 18 percent, a rate that has been sustained continuously by the NCUA Board actions since 1987, and we do so now again at a time when lawmakers in various parts of the country are proposing laws to establish maximum loan rates on consumers at levels as high as 36 percent. So when you say that the 18 percent rate is allowing sufficient room for responsible pricing, we are still authorizing a ceiling far below what many contemporary policymakers view as a prudential rate cap. I am comfortable with the proposed rate and I will be supporting it today.
To my fellow Board colleagues, I hope we can eventually consider an advance notice of proposed rulemaking to seek stakeholder input on the concept of using a variable rate when setting these temporary rate ceilings initiative was delayed behind other Board priorities in recent years and the COVID-19 fallout, but I must say that I am open to the idea of getting comments from federal credit unions on this topic.