ALEXANDRIA, Va.—With the Trump Administration calling for deep staff cuts at federal agencies, the NCUA board Thursday noted if such reductions are made at the agency, the normal operating level of the NCUSIF may need to be raised.
As CUToday.info reported, a directive from the Office of Management and Budget and the Office of Personnel Management calls for federal agencies to submit plans for “large-scale” reductions in employees, no later than March 13.
Board member Todd Harper emphasized that NCUA's current supervision program is “working as intended.”
“This also illustrates why we must maintain strong supervision at federally insured credit unions,” Harper stated. “Any future adjustments to agency staffing levels should not come at the expense of sacrificing safety and soundness, compliance and fair lending examinations. We must recognize that if the exam and supervision staffing levels are lowered, we may need to increase the share insurance fund’s normal operating level (currently 1.33%) to maintain sufficient reserves for potential losses.”
Harper said that a smaller staff will likely lead to less comprehensive supervisory exams and less oversight.
“That will likely lead to more credit union failures and increased share insurance fund losses,” he said. “Alternatively, we may need to alter our record keeping and reporting requirements to create real-time monitoring systems using innovative technology.”
Kyle Hauptman, in his first meeting as board chair, expressed similar concerns regarding pressures to cut government costs and jobs.
“In the last few weeks there's been a flurry of executive orders affecting the federal workforce,” Hauptman acknowledged. “Some of those directives may bring changes and uncertainty. This can be challenging for a number of parties within the credit union system…All of us at NCUA are diligently discussing how these announcements may affect NCUA operations, regulatory structure and our workforce.”
The workforce reduction directive, outlined in a memo from OMB Director Russell Vought and OPM Acting Director Charles Ezell, states the federal government is “costly and inefficient,” stating what is being asked of federal agencies is reorganization. The memo orders the heads of all executive departments and agencies to impose a “significant reduction” in the number of full-time employees by eliminating positions that “are not required.”
“Pursuant to the President’s direction, agencies should focus on the maximum elimination of functions that are not statutorily mandated while driving the highest-quality, most efficient delivery of their statutorily-required functions,” the memo states.
Share Insurance Fund Update
The board received a quarterly briefing Thursday on the share insurance fund. The agency stressed the fund performed well over the final quarter of 2024, bumping up the equity ratio two basis points from 1.28% to 1.30%. NCUA added no need currently exists to charge credit unions a premium.
NCUSIF Q4 key points:
- The fund recorded net income of $78.6 million
- Total income was $145.9 million for the quarter and $565 million for the year
- Total income rose $133 million from 2023, or 31%
- Operating expenses were $64.7 million for the quarter
- Expense for potential insurance losses increased by $5.3 million for the quarter; for the year the reserve increased by $29 million
- Total assets were valued at $22.3 billion, of which 99% were funds held with the US Treasury in cash overnight investments and long-term Treasury notes
- Total assets increased by $924.6 million for the year