NCUA's Hood to Senate panel: Extend CARES Act provisions for credit unions

Rodney Hood, chairman of the National Credit Union Administration, on Tuesday called on lawmakers to extend changes to the agency’s Central Liquidity Facility beyond year-end in order to ensure credit unions continue to have ample liquidity to serve members during the pandemic.

Photo courtesy of NCUA, staff photographer Meg Lake

Hood’s remarks came during financial regulators’ remote testimony before members of the Senate Banking Committee. He was joined by Randal Quarles, vice chairman of supervision at the Federal Reserve Board of Governors; Jelena McWilliams, chairman of the Federal Deposit Insurance Corp.; and Acting Comptroller of the Currency Brian Brooks.

Many in the credit union industry have called for Congress to extend changes to the CLF made as part of the CARES Act earlier this year or make them permanent. About 80% of the industry now has access to additional liquidity through the CLF, Hood said. In prepared remarks, he called the program’s growth and expanded borrowing authority “a testament to our nation’s credit unions coming together in a time of crisis to strengthen the national system of cooperative credit.”

However those changes will sunset on Dec. 31 without additional legislative action.

“I respectfully request that these changes be extended for the pandemic’s duration so the credit union system and NCUA can respond effectively should the need for emergency liquidity arise,” Hood told the Senate panel.

Sen. Catherine Cortez Masto, D-Nev., asked whether credit unions and other lenders were at risk of failure due to commercial customers struggling to pay back loans in a timely fashion. Hood downplayed those concerns and reiterated the industry’s strong capital position, but said a CLF extension could mitigate some risks.

“We do believe we have the tools to keep the credit union system safe and sound,” Hood said. “If there’s one ask I would have, it would be working with you and your committee to extend the CLF…While we have solid liquidity now [it] would be nice to know we have that extension beyond Dec. 31 of this year.”

Later in the hearing, however, Sen. Pat Toomey, R-Pa., said that with the economy recovering faster than expected, some programs that helped get the nation back on track may be able to be terminated. That may bode poorly for one of the industry’s biggest legislative asks during the lame-duck session.

Hood did not have the opportunity to respond to those comments. The NCUA chairman only spoke briefly during the hearing, and senators’ questions were primarily directed at Quarles.

While noting that the industry’s assets, deposits and loans are at all-time highs, Hood said, “there is pressure now on credit unions to reduce lending activities during this pandemic. The last thing we need is for one-third Americans not to have access to credit during these times, so if we can provide any relief from [prompt corrective action] it would be appreciated so management can focus on meeting members’ needs.”

Sen. Sherrod Brown, D-Ohio, has been a frequent critic of Hood and NCUA, and Tuesday’s hearing provided similar fireworks, though on a smaller scale than in the past.

After admonishing regulators for having delivered “a Wall Street wish list” rather than helping everyday Americans, he turned to Hood, the only witness Brown voted for during confirmation hearings.

“Instead of standing up for [Americans], you’re more focused on currying favor with the outgoing president and the photo opps that used to come along with it,” he said.