NCUA Board Approves $160.1 Million Equity Distribution from NCUSIF

The National Credit Union Administration (NCUA) Board on March 7, 2019 approved a $160.1 million equity distribution from the National Credit Union Share Insurance Fund (NCUSIF).

This is the second largest distribution to credit unions in the history of the NCUSIF.

At the end of the fourth quarter of 2018, the NCUSIF equity ratio was 1.39 percent -- above the normal operating level of 1.38 percent set by the NCUA Board. To lower the equity ratio to the normal operating level, the NCUA Board made the decision to make an equity distribution from the NCUSIF.

Eligible credit unions will receive a payment in the second quarter of 2019.

A financial institution that filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2018 will be eligible for a pro rata distribution.

Read the press release.

Small Business Loan Reporting Nightmare Recommendations

The National Community Reinvestment Coalition (NCRC) released a white paper on recommendations to the Consumer Financial Protection Bureau (CFPB) on the implementation of Section 1071 of the Dodd-Frank Act dealing with small business loan data collection.

The purpose of Section 1071 is to facilitate enforcement of fair lending laws and enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.

The proposed recommendations would increase the reporting burden on banks, credit unions, and other non-depository lenders to small businesses.

The law requires the CFPB to collect data on the race and ethnicity of the borrower. However, NCRC recommends that it is not enough to require disclosures of whether the business is Asian or Hispanic; but should consider sub-categories to fully capture the experiences of Asians and Hispanics of various nationalities in the marketplace.

Also, the law requires the reporting of revenue size of the small business. NCRC wants this required disclosure to be sufficiently detailed so that policymakers and the general public can track loans to microbusinesses.

In addition to the other required data elements that are to be collected, NCRC is recommending that CFPB collect information on the pricing of the loan, points and fees and loan terms, creditworthiness of the small business and its owner, the number of employees of the small business, colateral pledged by borrowers, start up status of the business, and loan performance.

Read the white paper.

NCRC: CRA for Credit Unions

Testifying before the House Subcommittee on Financial Institutions and Consumer Credit on the Community Reinvestment Act (CRA), John Taylor, President of the National Community Reinvestment Coalition (NCRC), called on Congress to apply CRA to credit unions, as well as to other non-CRA covered entities.

In his testimony, Mr. Taylor said that credit unions have not satisfactorily served minority and working communities, thereby reducing the level of responsible loans in traditionally underserved markets.

Citing a study released last year by NCRC, Mr. Taylor states that “credit unions, which have a statutory duty to serve people of “small means,” issue lower percentages of home loans than banks to minorities, women, and low- and moderate-income communities.”

"NCRC analyzed banks’ and credit unions’ performance on three lending types: home purchase, refinance, and home improvement. Across the three loan types, banks and credit unions were assessed on 69 performance measures scrutinizing: 1) the percent of loans to various groups of borrowers, 2) denial rates confronted by minority compared to white borrowers and lower income compared to upper income borrowers, and 3) approval rates experienced by borrowers. In 2007, banks outperformed credit unions on 44 of the 69 performance indicators (or 64 percent of the time). Credit unions surpassed banks performance only 7 percent of the time, while banks and credit unions performed equally well almost 30 percent of the time. In 2006 and 2005, banks performed better than credit unions on 65 percent of the indicators."

He also pointed out that the NCRC study found that state chartered credit unions in Massachusetts, which are subject to a state CRA requirement, outperformed federal credit unions in Massachusetts in serving underserved communities in Massachusetts.

In his testimony, he states that "mainstream credit unions clearly have the assets, resources, and geographic reach to serve minorities, women, and low- and moderate-income communities."