By Frank J. Diekmann
There are more reasons than there are summertime visitors at the Smithsonian that all the chaos just a few miles upriver from Alexandria, Va., is so unfortunate. But chief among them right now is that one federal agency that is actually DOING what so many others are TALKING about is being largely overlooked in the noise machine that is Washington. And it’s an agency you may have heard of: NCUA.
Stop me if you’ve heard any of these: “We need to reduce the size of the federal government.” “Uncle Sam needs to get out of every single part of our lives.” “Government should be run more like a business and be more efficient.” It’s like a three-year old whose mind is set on a cookie. Surely, every politician’s vocal chords must say to themselves, “Not this again.” (And good news! If you’re still tired and fed up from all those bumper sticker slogans from the last election, the mid-terms are nearly here!)
And yet NCUA has actually announced plans to take the bumper sticker and make it the owner’s manual.
Re-Evaluation Under Way
“The time has come for the NCUA business model to change,” said Board Chairman J. Mark McWatters last week in announcing moves he said would create greater efficiency, responsiveness, and cost-effectiveness as part of a long-range agency restructuring plan. “Positioning the NCUA to meet the changing demands of the credit union system we regulate in a transparent and fully accountable manner while promoting efficiency and effectiveness is essential. Re-evaluating our operations is integral to fulfilling our statutory responsibilities...”
NCUA made several announcements, but the biggest is consolidating the agency’s five regional offices into three by closing the Albany, N.Y. and Atlanta offices and eliminating four of the agency’s five leased facilities. It will be interesting to watch whether headcount in NCUA's management ranks also shrinks as the regional offices turn off the lights for the last time.
NCUA board member Rick Metsger said the announcement follows “months of very hard work by agency staff” in developing a “common sense plan to respond to a new economic environment.”
New Office Created, Others 'Realigned'
The federal regulator said it created internal review teams in late 2016 to rethink the agency’s operations, discuss how it can re-tool to do its job better, and make recommendations to the board.
Among the other announces is the creation of an Office of Credit Union Resources and Expansion; a restructuring of the Office of Examination and Insurance, and a realignment of its Asset Management and Assistance Center.
NCUA said it also plans to eliminate agency offices with overlapping functions and improve functions such as examination reporting, records management, and procurement. You can read more about all of that here.
The announcement of the changes come at the same time NCUA also said it is $5.8 million under budget at mid-year. Suddenly, 1775 Duke St. seems more like the address of The NCUA Corporation as it's preparing to announce an IPO.
The Taste Test
Pronouncements out of Washington are often a lot like pronouncements around new organic foods–it tastes better and better for you!!–and then we find out that “acquired taste” also had more calories than the Doritos we usually eat. So, the proof will be in the carob pudding.
All those announcements are a good first step, but now come the challenges. Can NCUA deliver better ROI on its budget investments? Will its overall budget shrink? After all, it may be $5 million under budget at mid-year, but due to a budget increase for the year, it’s still about $4 million over where it was in 2016. (In these cases, that always makes me think of the late, great Rep. Sonny Bono’s quip to GAC years ago: “Congress proposes spending $1 billion we don’t have, instead spends $500 million we don’t have, and announces we just saved $500 million!”) NCUA has about $318-million budgeted for 2018 (after approving a two-year budget plan earlier this year).
The Question that Really Matters to Most
And then there is a question of importance to rank-and-file credit unions that is every bit as important—if not moreso—as the size of the NCUA budget: What’s my exam experience going to be like now?
Inconsistencies between the current five agency regional offices (and even inside the regions) are the stuff of legend. Compliance mountains in one region can be molehills in another, and vice versa. How many exasperated CUs have expressed to their latest examiner some version of “But that’s not what the last guy said”?
A lot of shuffling is now going to take place as those examiners adjust to a three-regional-office environment and, in turn, credit unions adjust to their adjustments. (NCUA’s director of Examination and Insurance Larry Fazio did announce plans earlier this year to create a more consistent exam experience.)
Hello & Good Bye
It’s a good time to be an NCUA board member. After nearly a decade, many of the problem CUs have been merged or have improved their CAMEL rating (which helps the agency budget). Beyond the mid-year budget numbers and what appear to be future reductions, the big news is the agency has also announced that between $600 million and $800 million could be returned to credit unions in 2018 from the Temporary Corporate Credit Union Stabilization Fund. (Think Mr. McWatters and Mr. Metsger aren’t going to enjoy going on the road with that message? If I’m one of them, I get one of those oversized checks like those showing the proceeds from the CU’s golf tournament, and I take it with me—because that’s all CUs are going to remember. Go on stage. Hold up check. And give your one-line speech: “Thank you, that concludes my remarks.”)
The NCUA board has also been a model for something else that passes for Trumanesque nostalgia in DC: bipartisanship, with the Republican McWatters and Democrat Metsger completely out of step with the times and usually agreeing, at least while in public. (In the name of full disclosure, as a journalist, I would prefer they each communicated via combative tweets, but that’s just me.) Being a two-member board obviously is the reason, and maybe even-number boards is how every federal agency’s leadership should be made up. The Trump Administration might want to hold off on filling that empty board seat (which also saves money).
Of course, now comes the put-up-or-shut-up part, as all NCUA has to do is deliver on the campaign promises. It will have plenty of interested parties in the CU community watching, including CUToday.info. Too bad the folks in DC who should really be paying attention won’t be.
Frank J. Diekmann is Cooperator in Chief at CUToday.info and can be reached at Frank@CUToday.info or @FrankCUToday.