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.
I can’t blame Chairperson Harper’s hording of CU funds in the ERA of credit union doubt and passive plans (let alone our Nation’s Apprehension about everything) – I guess everyone is in a funk and saving for a rainy day. Where the chairperson is wrong and terribly short sighted is that fact that the NCUA should be holding the funds. Our industry needs confidence nationally, our industry needs the strong signals of a NCUA touting our foundations, and our industry needs capital in the hands of credit union operators focused on local communities. Our industry needs a calling card for a future rally….calling card for being a great place to work and take on a mission. This report is not that.
In a time where consolidation is more a “state of mind” than a necessity we continue to fret about our futures like pessimists and shrinking violets ready for the worst. We have watched an army of doomsday consultants, and shade throwing scale mongers browbeat the enthusiasm that young hearted leaders and cooperative owners should be leading with into submission. We need a voice to rally us, a coach with a half time speech for the record books, and the inspiration to reset our futures. Harper’s board is not the leaders for the job of rallying a wave of confidence for this time or any other. I am not asking for cheerleaders, but I am asking for the emotional investment that the NCUA can and should make in inspiring healthy outlooks, prudent investing in futures, and proving that our industry is safe and sound and ready to launch forward.
Recently the NCUA decided to push hard for better succession planning for boards and professional leaders alike. While succession is generally a topic for replacing aging leaders and board members – a natural process of renewal based on careers well spent. I wonder if the NCUA has admitted that they have finally realized that they have discouraged the culture of so many credit unions, or at least the board room and C-suite, that the life force of our industry is at an all time low. To talk about succession is putting the cart before the horse. What we need right now is the NCUA to work harder to rally the confidence of our industry – renew the faith-in-the-future of those searching for new leadership should be goal one.
They could start be rethinking the numbers and what they mean to us all…….keep pushing Vic.