As Prepared for Delivery on February 17, 2022
Thank you, Eugene, and staff.
There is a lot of good news in this report. The credit union movement continues to perform well despite the challenges of the pandemic. The percentage of assets held in CAMEL 1 and 2 credit unions continues to inch up and is at a record level of 97.5 percent. Losses to the share insurance fund are at extremely low levels in 2020 and 2021. And despite larger than expected growth in insured shares during the second half of the year, federally insured credit unions have maintained an average net worth ratio in excess of 10.2 percent.
Even without the extra $135 million in cash from the wine-down of the corporate asset management estates (AMEs) net income was still strong and is expected to grow.
Of course, this leads me to the issue of the NCUA’s investment strategy. The portfolio as shown on slide 7 was just under $20 billion at the end of 2021, the largest it has ever been. Although I’m grateful we finally made our current investment policy public, it is time for us to re-evaluate our strategy.
The National Credit Union Share Insurance Fund is a mutual asset — both reported and controlled by the NCUA and an asset reported by the credit unions. Credit unions are required to supply the majority of the fund’s equity through a 1-percent contribution of their insured shares. Just like any credit union board, the NCUA Board has the responsibility to regularly review its investment strategy . And for the sake of transparency and clarity, to do so at an open Board meeting.
- I do have a few questions focusing on slide 7 and the investment portfolio. It’s important that the NCUA and the credit union movement understand this
- How does the NCUA’s approach to investments differ from credit unions? Do we instruct credit unions to do one thing, and then we do something different for ourselves? Can you explain?
- What would you say to critics who believe some of our recent investments were ill-timed, resulting in the NCUA “leaving money on the table” so to speak?
Attached to the meeting materials for today’s meeting is the current investment policy approved by the Board in 2013. What changes should we consider to that policy?
Thank you, Eugene. I look forward to working with my fellow Board Members on reviewing and updating the investment policy soon. Mr. Chairman, this concludes my remarks.