Berger, in open letter to Harper, calls for NCUA to raise interest rate ceiling
As the NCUA Board is set to receive a briefing on federal credit unions’ (FCUs) permissible interest rate ceiling during tomorrow’s meeting, NAFCU President and CEO Dan Berger wrote an open letter to Chairman Todd Harper in American Banker detailing the consequences of the current cap.
While the Federal Credit Union Act sets the interest rate ceiling at 15 percent, it provides the NCUA authority to go above that limit, but only in 18-month increments.
“Since 1987, the NCUA has repeatedly voted to raise and maintain the interest rate ceiling at 18% — acknowledging that not doing so would impair the safety and soundness of individual institutions, while also undermining access to affordable credit for low-income and low-credit-score borrowers,” Berger noted. The NCUA most recently approved extending the 18 percent ceiling at its January board meeting.
NAFCU has long called for the NCUA to adopt a floating interest rate ceiling, or at least increase the cap to 21 percent, to ensure credit unions can effectively lend in challenging interest rate environments and remain competitive.
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