NCUA Director Metsger Shares Top Priorities With Northwest Credit Unions

NCUA Director Rick Metsger had a crowd of Northwest credit union leaders laughing, nodding, and attentive on Tuesday evening as he delivered the opening keynote of the NWCUA’s Amplify Convention in Spokane.

“You don’t get a lot of birthday cards,” Metsger said to a chuckling crowd about what it’s like to be a regulator. “But the good thing is, in Washington it’s all relative, and Congress just received the lowest approval rating in the history of polling. So when the bar’s that low, being a regulator’s not that bad.”

Risk-Based Capital

Metsger offered insight on his thinking about a number of regulatory issues, including the risk-based capital (RBC) proposal that drew fire from credit unions and legislators. “What I really appreciate were the thoughtful comments, many of which came from the people in this room,” he said. “You’ll see that the input so many of you gave will be reflected in the risk weights of the new proposal.”

Metsger pointed out that he had been calling for the separation of interest rate risk and credit risk, and commended NCUA Chair Debbie Matz on concurring with that change despite the fact that it will trigger a new comment period.

He said he would like the new proposal to be finished as quickly as possible. “We have limited bandwidth,” he said. “There is so much RBC work that it’s pushing back other relief issues.”

Auto Lending and Fraud

Metsger also shared concerns about auto lending and fraud. “This is a great growth area and credit unions have done well,” he said of car loans, “but it’s also an area of concern.” He pointed out that car loans with terms of seven years or more had grown 24% in the last year.

After several years, he said, “the collateral of the loan could have dissipated and fallen below the amount that you’re owed.” He said that this was an area he was watching closely.

Moving on to fraud he said, “The thing that frustrates me the most is getting things across my desk about internal fraud at credit unions.”

He said that most instances of fraud were happening at community credit unions with assets of less than $50 million. The average perpetrator, he said, was 57 years old, had been working at the credit union for 17 years, and was either the only employee or one of only two or three employees.

Shockingly, of the more than $150 million in losses to the Share Insurance Fund caused by fraud cases, said Metsger, zero of those cases were detected by boards of directors.

“Fraud may not pose a systemic risk to the Share Insurance Fund,” said Metsger, “but it poses a reputational threat to the credit union system.”

FHFA Proposal

Metsger also called the audience’s attention to a proposed rule from the Federal Housing Finance Agency, which would require all credit unions to meet the 10% residential mortgage loans requirement in order to qualify for membership with a Federal Home Loan Bank. He pointed out that banks with assets under $1 billion, which includes 90% of all banks, are exempt from the rule, but as proposed zero credit unions are exempt.

“This proposal jeopardizes our plan to use FHLB membership as part of liquidity, especially for smaller credit unions,” he said. “It would be an undue burden that will make it harder for credit unions to meet the housing needs of their members, especially low-income credit unions.” He called on credit unions to comment on the proposed rule.

Questions about this story? Contact James Pearson: 206.340.4790,

Posted in Events, NCUA.