CUs to NCUA: Provide PCA Relief from Stimulus Deposit Pressure

Logo for the National Credit Union Administration

In a joint letter with other state credit union leagues and the Credit Union National Association (CUNA), the California and Nevada Credit Union Leagues petitioned the National Credit Union Administration (NCUA) to uniformly act to provide additional relief to credit unions facing prompt corrective action (PCA) challenges caused by congressional stimulus funds as a part of the American Rescue Plan Act.

Although the $1.9 trillion plan provided stimulus funds to eligible recipients under slightly more restrictive criteria than the previous two rounds, the dollar amount substantially increased, thus causing pressure on credit unions' net worth.

The letter recognizes and appreciates NCUA Chairman Todd Harper’s remarks during the recent March 18 board meeting regarding potential relief in the area of PCA, yet still calls on the NCUA to adopt an interim final rule (IFR) on par with the action taken that expired in 2020.

That rule, adopted last year, provided relief to credit unions experiencing PCA issues related to an increase specifically in share (deposit) growth. The letter requests that relief should remain in effect until the end of the COVID-19 pandemic, as determined by the Centers for Disease Control (CDC) or other federal entities authorized to make such a determination.

In May 2020, the NCUA adopted an IFR to deal with an increase in share growth due to government stimulus payments. The issue is more relevant today, particularly given the new payments' volume and dollar amount, mostly reaching account holders this week.

The Leagues have also been working with its California and Nevada congressional delegations to flag this issue for the NCUA and call for a proportional response, as no credit union should suffer undue harm stemming from any stimulus or economic impact payments.

The message has been well received on Capitol Hill, and the Leagues are working to ensure that appropriate action is taken.

Click here to view the letter.

Pin It