FOR IMMEDIATE RELEASE
November 20, 2019
CONTACT: Shelton Roulhac, NASCUS Communications; firstname.lastname@example.org
NASCUS PRESIDENT AND CEO LUCY ITO TESTIFIES AT NCUA’S 2020 – 2021 BUDGET BRIEFING
Better transparency about the Overhead Transfer Rate (OTR), consistency in distributing the OTR among credit unions, and the cost allocation of NCUA’s supervision of credit union service organizations (CUSOs) and third parties were the top three points pressed by NASCUS during its presentation at the NCUA Budget Briefing Wednesday.
ARLINGTON, Va. – NASCUS President and CEO Lucy Ito laid out the key points on behalf of the state system during her presentation. Specifically, she said the state system urges NCUA to consider:
- Providing greater transparency about what drove the OTR down in 2018, down in 2019 — but up in 2020.
- OTR distribution consistency with credit union system proportionality.
- Re-visiting the cost allocation of NCUA’s supervision of CUSOs and third parties.
Providing greater transparency about what drove the OTR down in 2018, down in 2019 — but up in 2020.
Ito stated, “It would be helpful to understanding the OTR fluctuations if NCUA would publish its annual OTR summary in conjunction with the agency’s annual budget justification document.” She further noted that, “NASCUS would welcome the opportunity to review with NCUA its process of collecting and validating self-reported federal examiner hours and evaluating alignment with state examiner hours to foster greater federal-state trust and collaboration.”
OTR distribution consistency with credit union system proportionality.
“NASCUS values the simplicity of implementing the current OTR methodology and has, accordingly, accepted the simple proxy of insured shares in the allocation of OTR between federal and state credit unions,” said Ito. “While federal and state credit unions respectively comprise 51.1% and 48.9% of insured shares, the actual proportion of federal to state credit unions is 3,335 (63%) to 1,973 (37%). We call attention to the distribution between the number federal and state credit unions simply as a factor to review going forward in evaluating the equity of the OTR methodology,” continued Ito. “For example, the time required to examine 3,335 credit unions is greater than the time required to examine 1,973 credit unions. The proportionality issue is worthy of NCUA consideration.”
Re-visiting the cost allocation of NCUA’s supervision of CUSOs and third parties.
“We do not agree that 100% of the time and costs associated with NCUA’s supervision of CUSOs and third parties is insurance-related. We recommend that NCUA allocate at least 25% of its CUSO and third party workload hours to its safety and soundness responsibility as charterer/prudential regulator of federal credit unions,” said Ito.
Ito applauded the NCUA’s implementation of the overhead transfer rate methodology and the agency’s commitment to transparency and fairness.
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Shelton Roulhac, Vice President, Communications, email@example.com or (703) 528-5974
NASCUS is the national association that advocates for a strong and healthy state credit union system, and whose members include state regulatory agencies, credit unions, credit union leagues, and organizations that support the state credit union system.