Rising Rates Demand NCUA Raise Permissible Interest Rate Ceiling, NAFCU Tells Agency

NCUA should immediately raise the permissible interest rate ceiling to mitigate unnecessary interest rate risks facing federal credit unions, NAFCU told the agency in a letter.

Vice President of Regulatory Affairs Ann Kossachev urged the agency to establish a floating permissible interest rate ceiling equal to a 15% spread over the prime rate or, alternatively extend the 18% permissible interest rate ceiling for the maximum allowable period of 18 months, no fewer than 90 days before its scheduled expiration on March 10, 2023.

Under the Federal Credit Union (FCU) Act, the trade group noted that the NCUA board, in coordination with Treasury, relevant congressional committees, and other federal agencies, has authority to raise the permissible interest rate ceiling if money market rates have risen over the past six months or if prevailing interest rate levels threaten the safety and soundness of individual federal credit unions.