NCUA Board Member Rodney E. Hood Statement Following the Staff Briefing on the Share Insurance Fund’s Performance

November 2022
NCUA Board Member Rodney E. Hood Statement Following the Staff Briefing on the Share Insurance Fund’s Performance
NCUA Board Member Rodney E. Hood asks the NCUA's Chief Financial Officer a question during the November 2022 Board Meeting.

NCUA Board Member Rodney E. Hood asks the NCUA's Chief Financial Officer a question during the November 2022 Board Meeting.

As Prepared for Delivery on November 17, 2022

Thank you for today’s presentation. 

Eugene, at a previous board meeting on the status of the Share Insurance Fund, we discussed the outside accounting firm we hired to look at the true-up issue and how this impacts the equity ratio. For the record, at one of the last share insurance board updates, we discussed that the true-up memo by the outside accounting firm states that the timeliness and accuracy of the data are required in the Federal Credit Union Act, so this provision in the law, and I quote, “May provide some latitude from a strict interpretation, that the equity ratio must be calculated based on the financial statements amounts, particularly given the knowledge of the timing effect on the calculation of the equity ratio. Accordingly, it may be permissible to use the pro forma calculation of the contributed capital amount when calculating the actual equity ratio.”

In a previous board meeting, I noted that the letter pointed out the current practice understates the equity ratio by several basis points and that there were several options for correcting this understatement. Can you please provide an update on the next steps?

Eugene, I do have some additional questions:

  • Many of the failures this year are a result of fraud. Do we think being back onsite will be helpful in discovering fraud?
  • Given how interest rates have increased, every security we have currently is underwater, correct?
  • On slide 9, I see several sizable institutions changed in their CAMELS scores. Is there any takeaway from these data? Do we think any of this has to do with the new “S” component or any individual scoring component?

Thank you. I have no further comments or questions.

Rodney E. Hood Share Insurance Fund
Last modified on
11/18/22