During a hearing before the House Financial Services Committee of banking regulators, NCUA Chairman Todd Harper indicated that NCUA defers to Congress on whether any action should be taken to raise the federal deposit insurance level but said that should action be taken that Congress maintain parity between share insurance coverage provided by the NCUA and deposit insurance coverage provided by the FDIC. He further indicated that if Congress is inclined to raise the insurance threshold that he prefers the recommendation of the FDIC to take a “targeted approach” whereby certain accounts such as business accounts could have higher coverage levels.
If Congress were to raise the coverage amount, he said that Congress should provide the NCUA with greater flexibility in administering the Share Insurance Fund and that Congress should allow for a higher normal operating level, eliminate the 1.5% ceiling from the Federal Credit Union Act, and modify the current limitation on assessing premiums.
In addition to speaking on the issue of federal share insurance, Chairman Harper encouraged Congress to restore changes to the Central Liquidity Fund that were put in place during the COVID-19 pandemic but have since expired. He also asked that Congress provide the NCUA with statutory examination authority over third-party vendors and CUSO’s because “a failure of one of these third parties could cause hundreds of credit unions and potentially tens of millions of their members to lose access to their funds simultaneously, resulting in a loss of confidence for the credit union industry and the entire financial sector” he said.
