As Prepared for Delivery on September 23, 2021
Thank you, Mr. Chairman. And thank you, Eugene, and staff for this report.
Today’s report is good news.
At the February and May board meetings, I said credit unions should stay focused on the needs of credit union members and not on the NCUA’s understandable concerns about the future. Our caution served us well. As we know, the decline in the Share Insurance Fund’s equity ratio was not due to unsafe or risky practices by credit unions. It was the result of government stimulus and other pandemic-related issues. Thankfully, the decline in the equity ratio through June 30, 2021, was a little less than expected, and we are projecting that it will increase by year-end.
Over the past year, credit unions have continued to remind us that what we do here has an impact on real human beings. If we had acted prematurely, we would have made ourselves more comfortable but might have taken away resources from credit unions that during the pandemic would be better spent helping an untold number of members. That said, I have to admit that it’s indisputably uncomfortable for the Fund to be again so close to our lower limit of 1.2 percent. Neither credit unions nor the NCUA staff would enjoy an existence where we’re constantly on edge, worried that we’re one small dip away from announcing a mandatory Restoration Plan. So, if our projections are accurate, we’ll soon have some breathing room and thus be able to reassess the Fund’s status after all the pandemic-related factors fade away.
Lastly, I’d be remiss without mentioning the Fund’s investments. We’re in a low-rate world and that’s something we have to deal with, and our low returns add pressure that is not the fault of the NCUA or credit union members. Credit unions regularly review their investment policies.
A review of our investment policy, operating procedures, and oversight is just part of sound management. Although the current low-rate environment presents challenges, reviewing our investment policy is something that could be worthwhile, and it is incumbent upon us to look for every extra dollar we can find.
Thank you, Mr. Chairman. This concludes my remarks.