Last week’s NCUA Board Meeting agenda included the latest audited report on the Share Insurance Fund. The 12/31/21 report like the prior reports since Chairman Harper has been on the board was further proof that the fund and the credit unions who own it are exceeding what many, including our Chairman, had imagined would be our performance during the pandemic crisis.
Despite his insistence for the last two years that the agency needs easier access to even more of our members’ capital, the current report indicates that credit unions continue to be safe and sound, in both a financial sense and as a cooperative business model.
Even as credit unions met the needs of their members and liquidity grew at unprecedented rates, credit union balance sheets have withstood the challenge. The crisis that lead Chairman Harper to ask for statutory permission for even higher Net Operating Levels and increased power over the SIF equity ratio has yet to materialize and the numbers continue to prove him wrong.
With the fund balance now over $20B, the number of credit unions rated as CAMEL 4 or 5 account for less than .5% of total insured shares and industry average net worth is over 10%. Further proof of this wide spread health was revealed in a later agenda item concerning the temporary rule on PCA. While the extension of the rule was approved for one more year, it was revealed that during this past year only 14 credit union–that’s right, only 14 out of almost 5000–found it necessary to apply for permission to submit a streamlined net worth plan when their capital ratio dropped below 6%. I’m not arguing against the rule, it was worth having in place given the flood of liquidity, but its very light usage certainly ran counter to the scenario of dread preached by the Chairman.
If we ever needed more proof that we can never trust any of the “sky is falling” projections of agency bureaucrats it is yesterday’s reported 2021 net income of the NCUSIF of over $150M. The gift that keeps on giving, the Corporate Stabilization Fund, contributed over $135M to that income number upon reversal of previous booked losses to the Corporate AMEs. More proof of the agency gross and incompetent over estimation of losses almost ten years ago and the resulting rape of credit union capital accounts to fund the TCCUSF.
So please excuse me if I roll my eyes the next time the Chairman talks about how we still have yet to see a certain apocalypse and the agency needs to dip their hands in our members’ pockets. If he has paid any attention to last week’s report he is now on notice that we don’t trust his projections or his proposed changes to how the SIF was designed to work by a guy we could trust, Ed Callahan. That was innovation that has stood the test of time.