WASHINGTON–America’s Credit Unions is urging NCUA to once again extend the 18% interest rate ceiling for loans made by federal credit unions.
The trade group’s head of regulatory advocacy, James Akin, sent a letter to NCUA Chairman Kyle Hauptman making the request, noting the NCUA Board has voted 23 times to maintain the 18% cap, most recently voting in July 2024 to extend it through March 10, 2026.
“America’s Credit Unions appreciates your consistent leadership in maintaining the federal credit union loan rate ceiling at 18%. Your support has helped credit unions navigate an elevated-rate environment while continuing to serve members affordably,” the letter states “Keeping the ceiling at 18% remains essential to protect safety and soundness, by preserving needed pricing flexibility amid higher funding and credit costs, and to sustain access to credit for the very members who would be most harmed by a reversion to a 15% cap.
Power to Act Unilaterally
“We also wish to express our support for your authority to act unilaterally, to preserve the 18% ceiling in the coming year,” the letter continues. “We recognize the NCUA Board will likely not be at full capacity as 2026 begins. However, maintaining the loan interest ceiling is unquestionably an essential Board action for protecting the credit union system, and precedent confirms that a single Board Member can and should carry out such essential duties when the Board has vacancies.”
As America’s Credit Unions stated, under the Federal Credit Union Act federal credit unions are generally limited to a 15% annual interest rate on loans, but the NCUA Board has authority to establish a higher permissible rate for periods up to 18 months when warranted by economic conditions.
“Allowing the interest rate ceiling to revert to the 15% statutory baseline would have a detrimental impact on many credit unions and the communities they serve,” the letter states.
One Person Boards & Quorums
America’s Credit Unions went on to note that NCUA continues to affirm its “long-held view that a single board member constitutes a quorum when there are no other board members” and that the chairman and agency leadership have “the required authorities to continue … fulfilling our mission” even as a one-member board.
ACU went on to add that the agency has argued it has “precedent and standing delegations of authority in place” for a single Board Member to perform “all operational and statutory requirements”, pointing to the early-2002 period when then-Chairman Dennis Dollar served as a sole board member.
Court Challenge
That argument is being challenged in court by Todd Harper and Tanya Otsuka, who were fired by President Trump in April of this year and who are arguing a one-person board does not qualify for a quorum, among other arguments.
