ALEXANDRIA, Va.—NCUA confirmed that Chairman Debbie Matz plans to ask the board to vote at the January 2016 open board meeting to publish the current Overhead Transfer Rate (OTR) methodology and operating fee methodology in the Federal Register for public comment.
Matz had previously committed to taking the action in January, and it was noted again in the agency’s new frequently asked questions document addressing its new operating budget.
The FAQs also note that after the methodologies are published, they will be published “periodically thereafter in conjunction with the NCUA’s Strategic Plan.” Under the anticipated comment process, the NCUA board would analyze the comments and determine whether or not to adjust the methodology, the agency stated.
In November the NCUA board voted in favor of delegating to the agency’s Director of Examination & Insurance responsibility for setting the overhead transfer rate each year. The vote was 2-1, with board member Mark McWatters casting the dissenting vote.
The board also approved by the same vote delegation of authority to the agency’s CFO to also set the operating fee each year using a board-approved methodology. The operating fee was set at .47% for 2016.
The board approved an overhead transfer rate for 2016 of 73.1%, up from 2015’s 71.8%. NCUA’s Director of Examination and Insurance, Larry Fazio, said the primary driver of the increase in the 2016 OTR was an increase in the percentage of insured shares held by state-chartered credit unions (up 0.9% percentage points to 47.7%).
The board vote and the change in authority were met with disapproval by the National Association of State Credit Union Supervisors (NASCUS).
“By shifting virtually all safety and soundness-related expenses to the share insurance fund overhead transfer rate, NCUA is foregoing responsibility for safety and soundness as the charterer of federal credit unions,” said NASCUS CEO Lucy Ito.” Other financial institution charterers without deposit insurance obligations – including state regulators and federal supervisors such as the Office of the Comptroller of the Currency and the Federal Reserve – assume full responsibility for safety and soundness. We hope that after the board agrees in January to publish the OTR for public comment in the Federal Register a much more clear picture will emerge as to how and why the agency assigns all safety and soundness expenses to the OTR – and that the agency will consider making meaningful changes as a result of public comment.”
Ito added that NASCUS also objects to delegating the authority to staff of setting the OTR. “This will only decrease transparency and especially accountability."