NAFCU Journal November December 2021

11 THE NAFCU JOURNAL November–December 2021 Fortunately, share growth is beginning to drop from its historic heights. Second- quarter share growth was half the pace of any quarter since the pandemic began. Even if share growth returns to its pre- COVID levels, low rates may still place downward pressure on the equity ratio. At a minimum, though, it should be sev- eral more years before the equity ratio of the SIF threatens to breach the 1.2% floor. Since joining the NCUA Board, Chair- man Harper has consistently pushed for increased statutory authority over the SIF. Although he has stated that the authorities sought need not be identical to the FDIC’s in its management of the Deposit Insurance Fund (DIF), the bank model has served as a constant frame of reference. Many of the statutory changes that Chairman Harper has identified were also included in a 2013 agency white paper which determined that more equity was needed to manage the SIF through economic downturns. The FDIC was granted increased author- ity to charge assessments following the Great Recession, when the equity in the DIF was entirely wiped out. An obvious question, then, is whether losses to the SIF have been substantially similar to bank fund losses as to warrant corre- sponding statutory changes. The line chart shows the loss rates of the SIF and DIF resulting from retail institutions (i.e., excluding corporate credit unions and bankers’ banks). Bank losses since 2008 are over eight times higher than credit union losses over that period. It is true that corporate credit unions suffered far greater losses than bankers’ banks and accounted for the majority of SIF losses following the Great Recession. However, the SIF’s exposure to corporate credit unions is 70% lower today than it was in 2008–09. Furthermore, today’s corporates are far better capitalized and more tightly regulated. For these rea- sons, NAFCU finds no basis in granting the NCUA the power to charge larger and more frequent premium charges to insured credit unions, and we will con- tinue to push back against agency efforts to lobby Congress for such authority. Curt Long is NAFCU’s vice president of research and chief economist. Fortunately, share growth is beginning to drop from its historic heights. Second-quarter share growth was half the pace of any quarter since the pandemic began. Even if share growth returns to its pre-COVID levels, low rates may still place downward pressure on the equity ratio. Annual Insurance Fund Losses per $100,000 of Insured Shares/Deposits Note: Data reflect estimated losses on retail institution failures Sources: FDIC, NCUA, NAFCU calculations $1,000 $800 $600 $400 $200 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 SIF (CUs) DIF (banks)