STATE CU SYSTEM LEADER URGES NCUA BUDGET TRANSPARENCY
NASCUS’ Lucy Ito focuses on 3 key areas in NCUA budget briefing statement
Three key points about transparency of the NCUA budget that focused on the overhead transfer rate (OTR), separation internally of NCUA’s examination and insurance functions, and the future structure of the NCUA Board were all addressed in a statement by Lucy Ito, president and CEO of NASCUS, at the board’s budget briefing today.
Ito was one of seven stakeholders sharing their views before the NCUA Board on the 2017-18 agency budgets.
In her comments, Ito noted:
- Greater transparency required for the OTR. “Greater transparency, we believe, will be a big step to adopting an OTR that is easier to understand and more equitable to both state and federal charters,” she said. She also noted that – in accordance with a legal analysis commissioned by NASCUS – the OTR should be subject to formal notice and comment under the Administrative Procedure Act. “NCUA’s sister federal bank regulatory agencies—FDIC, OCC, and the Fed—all publish their proposed assessments in the Federal Register for public comment pursuant to the APA. So should NCUA,” she said. She also urged the board not to delegate its its OTR implementation authority to NCUA staff. “The OTR is important. The credit union system deserves better than to have NCUA leadership delegate away its important responsibility of budgetary oversight and its fiduciary responsibility to the fund.”
- Clearer separation needed between NCUA’s chartering authority, insurer functions. “Today, there is a potential conflict of interest within the agency unless these functions are internally separated,” Ito said. “Obviously, there are budget considerations for separating the two functions within the agency. However, if separated, credit unions would know exactly what costs are associated with running the chartering and prudential supervisory agency and what costs are associated with administration of the insurance fund.”
- State regulator representation on the NCUA Board – and larger membership. “NASCUS continues to support enhancing the NCUA Board’s deliberative process by increasing its size from three members to five — with one seat reserved for a person with experience as a state credit union regulator,” she said. “Clearly, these are changes that require acts of Congress. In fact, there is at least one proposal in Congress calling for a five-member NCUA Board. We suggest this here to underscore the benefits that could result. We know that expanding the Board by two seats will have an impact on the agency’s budget.” She said that NASCUS has analyzed those costs and estimates that (based on the approved 2016 NCUA budget of $291 million) each additional Board seat would cost approximately $979,000, for a total of just under $2 million – an increase in the agency’s budget (for 2016) of less than 1%. (0.67%). “This slight increase is clearly not material,” she said.
“Our comments here are all offered in good faith to assist NCUA in improving the transparency of its budget and to ensure equitable treatment of state and federal credit unions for the resources they provide to the agency,” Ito said. State regulators have reached this view after being accountable, themselves, to state legislatures or executive departments. In fact, 100% of state credit union regulators must have their budgets approved by either their governor, or their state legislature, or both. NCUA has no such comparable oversight of its budget development. Our point being that all states agencies have some type of external oversight of their budgets. This serves as an important check and balance on state regulator expenditures.”