ARLINGTON, Va.—With a budget that has increased by more than 50% over the past five years, both credit union trade groups are pushing NCUA reverse that trend line in 2015.
Noting that for the fifth year in a row NCUA has approved an operating budget without any type of formal hearing, NAFCU is calling on the agency to be more transparent, while also urging NCUA to cease its expansion into certain areas. Similarly, CUNA said there is a “lack of a systematic process for credit unions to provide input on the budget.”
“Ever single dollar spent by NCUA starts as a dollar from a credit union somewhere in the United States, and any NCUA expenditure has a direct impact on the daily operations of all regulated and insured credit unions,” wrote NAFCU’s president/CEO, Dan Berger.
Calling on the NCUA board to “look at each line item of the budget with the explicit goal of achieving cost-savings,” Berger said NAFCU does not support spending credit union resources to expand its examination authority into non-credit union third parties.
“While NCUA contends that examination and enforcement authority over third party vendors will provide regulatory relief for the industry, NAFCU and our members firmly believe that such authority is unnecessary and will require considerable expenditure of the agency’s resources and time,” Berger wrote, going on to say such efforts to little to address safety and soundness. “A better use of credit union resources in the examination space would be to appropriately train and educate examiners to that examinations are conducted consistently in all regions.”
NAFCU is also calling on NCUA to provide “clearer disclosures” of how the fees CUs pay the agency are managed, and specifically how the NCUSIF, the Temporary Corporate Credit Union Stabilization Fund, and the Central Liquidity Fund are being managed.
NAFCU pointed to the $69.8 million in “employee wages and benefits” expenses cited by the agency, as well as the $148.3 million in “operating expenses” the agency reported, saying that no additional information is provided beyond the overall numbers.
“Finally, I would again note NAFCU’s considerable concern that in 2014, for the fifth year in a row, NCUA released and approved its annual budget without a formal hearing, thereby depriving the credit union industry and its membership, from which the agency receives its total funding, of the opportunity to formally comment on the agency’s budget,” Berger concluded. “NAFCU wholeheartedly objects to this continued practice and renews its call for the agency to be transparent in the budget process.”
'Refrain From Raising the 2015 Budget'
Meanwhile, in his own letter to NCUA, CUNA CEO Jim Nussle noted that since December 2009 the National Credit Union Administration's budget has expanded by 51%. Nussle urged the agency to "refrain from raising the 2015 budget and to look for additional ways to streamline its operations."
"We note that the Board has taken steps to improve the flow of information about its budget, and we commend the agency for creating a separate budget web page and maintaining budget-related information and documents on the site,” Nussle said in his letter. "Nonetheless, serious questions and concerns remain as to why the agency's budget continues to expand, especially in light of credit unions' increasingly strong financial health and their efforts, often at the direction of examiners, to contain costs."
CUNA also raised concerns over:
- A lack of a systematic process for credit unions to provide input on the budget. “Without a process, stakeholders can only raise general concerns prior to the adoption of the budget, and budget matters aren't revisited again until the following July.”
- No public information provided on how the NCUA's resource allocation helps to accomplish the agency's strategic goals. CUNA urges the agency to provide such an analysis.
- No access to the standards for raises and other increases for NCUA staff, whose pay and benefits comprise 73% of the agency's budget.
- An unclear picture about how the agency employs technology in examinations. CUNA believes the NCUA should strive to move its exam process forward with technology and streamline examinations as much as possible.
- A proportionately higher increase in NCUA staffing costs compared with the Federal Deposit Insurance Corp., which dealt with larger amounts of assets in troubled institutions during the financial crisis.
- A National Credit Union Share Insurance Fund overhead transfer rate of 69.2%, an all-time high.