On December 15, the NCUA Board held its final meeting of 2023. The Board was briefed on the Share Insurance Fund’s (SIF) Normal Operating Level, which will remain at 1.33%. The NOL was lowered to 1.33% from 1.38% at the end of 2021. The Board discussed inflation and the current rate environment during the briefing along with the potential impact these factors may have on the SIF in the coming months and years.
The Board was also presented with the proposed 2023-2024 NCUA Budget for a vote. The funding levels in the total 2023 draft budget would be reduced by $6.7 million. The original draft was posted to the NCUA website on September 29, 2022, with an identical version published in the Federal Register on October 5, 2022. The Board voted unanimously to approve the budget. Toward the end of the budget discussion, Chairman Harper inquired as to the impacts of the Financial Transparency Act on the NCUA Budget should NDAA pass. It was noted that should this pass, implementation would be a multi-year effort that NCUA would need to assess.
Finally, the Board unanimously approved a Proposed Rule, NCUA Parts 701 and 714, Financial Innovation – Loan Participation, Eligible Obligations, and Notes of Liquidating Credit Unions. The proposed rule would amend NCUA’s rules and regulations regarding the purchase of loan participations and the purchase, sale, and pledge of eligible obligations and other loans, including notes of liquidating credit unions. The proposed rule is also intended to clarify the NCUA’s current regulations while providing additional flexibility for federally insured credit unions to use advanced technologies and opportunities offered by FinTechs. The NCUA Board praised the proposed rule as a means to keep the NCUA relevant in this space and allow credit unions greater opportunities.
- Board Approves NCUA 2023–2024 Budget; Issues Proposed Rule on Financial Innovation
- NCUA Chairman Todd M. Harper Statement on the Proposed Financial Innovation Rule 12/15/2022
- NCUA Chairman Todd M. Harper Statement on the NCUA’s 2023–2024 Budget 12/15/2022
- NCUA Chairman Todd M. Harper Statement on the Normal Operating Level Briefing 12/15/2022
Agency Accepting Comments and Budget Briefing Presentation Requests
Sept. 29, 2022 — The National Credit Union Administration’s staff draft budget for 2023–2024 is now available on the agency’s website for review and comment. The staff draft budget has also been submitted for publication in the Federal Register, and the comment period is open until October 28, 2022.
The proposed combined 2023 staff draft budget is $367.0 million, or 8.1 percent higher than the 2022 budget. The proposed operating budget is $350.8 million, which is 9.6 percent higher than in 2022. The proposed 2023 capital budget is $11.2 million, or 14.1 percent lower than in 2022. The proposed Share Insurance Fund administrative budget is $4.9 million, or 21.5 percent lower than in 2022. The proposed budget summary and detailed budget justifications can be found on the Budget and Supplementary Materials page on NCUA.gov.
The agency will hold a public budget briefing at its Central Office on Wednesday, October 19, 2022, beginning at 10 a.m. Eastern. The meeting will be livestreamed on NCUA.gov.
To Comment on the Proposed Budget:
- Submit comments on Docket # NCUA-2022-0145 at the Federal eRulemaking Portal by October 28, 2022.
- Comments should provide specific, actionable recommendations.
To Request an In-Person Presentation at the October 19 Budget Briefing:
- Email your request to [email protected] by October 12, 2022.
- Include the presenter’s name, title, affiliation, mailing address, email address, and telephone number.
- The Board Secretary will notify approved presenters and give them their allotted presentation times.
For those approved to present at the budget briefing, written statements and presentations must be sent to [email protected] by 5 p.m. Eastern on October 14, 2022. In addition to delivering remarks at the budget briefing, registered presenters will have the opportunity to pose questions about the budget to NCUA staff.
The Board will consider a final budget at an open meeting later this year.
(Dec. 23, 2020) A 2021 budget of $341.4 million – with an overhead transfer rate (OTR) of 62.3% — was approved by the NCUA Board on a split vote of 2-1 at its meeting late last week, with barely two weeks to go until that budget takes effect for the new year.
The agency’s budget for next year is down about 1.7% from the 2020 budget, but the OTR went up by 100 basis points. Board Chairman Rodney Hood and (now) Vice Chairman Kyle Hauptman voted for the 2021 budget; Member Todd Harper against it.
The OTR represents money that is transferred from the National Credit Union Share Insurance Fund (NCUSIF) to the operating budget of the agency to cover “insurance-related” expenses of the agency. The remainder of the operating budget is covered by the operating fee paid by federal credit unions, resulting in a split of 62.3% (from the OTR) and 37.7%, respectively.
NASCUS President and CEO Lucy Ito said the OTR increase for next year is a sign of the need for NCUA to reconsider how it allocates expenses.
In a press statement following last Friday’s board meeting, Ito said what appears counterintuitive to the state system in the 2021 NCUA budget is that the projected increase in workload for state exams is not matched with an at least equal if not greater increase in workload for federal credit union exams. She noted that assets between state and federal CUs are approximately equal, yet FCUs outnumber FISCUs by more than 1,000 (3,213 FCUs versus 1,920 FISCUs as of the end of the 2020 third quarter).
Further, she said, the 1-point OTR increase will essentially mean there will be $3.3 million less to cover losses by the National Credit Union Share Insurance Fund should those materialize as the result of an economic downturn due to the financial impact of the coronavirus pandemic
“NASCUS will continue to work with NCUA to allocate expenses to the OTR in a way that safeguards balance and equity, and that ensures that the insurance fund has the resources necessary to protect the savings of credit union members,” she said.
Along those lines, she added, NASCUS welcomes the formation of an OTR working group comprised of NCUA, state regulators, and NASCUS to assure transparency in and reasonableness of cost allocation assumptions to foster equity between federal and state credit unions.
LINKS:
Notice: Overhead transfer rate
Board action memorandum — 2020-2021 budget
NCUA 2021-2022 budget justification (Dec. 18, 2020)
(Nov. 20, 2020) NCUA joined the federal banking agencies Thursday in releasing a fact sheet meant to clarify Bank Secrecy Act due diligence requirements for credit unions and banks that offer services to charities and non-profits. The fact sheet, the agencies said in a release, highlights the importance of legitimate charities and nonprofit organizations having access to financial services. It also addresses the ability of those groups to transmit funds through legitimate and transparent channels, especially in the context of responding to the coronavirus. Further, the agencies said, the fact sheet clarifies that charities and nonprofit organizations as a whole do not present a “uniform or unacceptably high risk of being used or exploited for money laundering, terrorist financing, or sanctions violations, and that banks and credit unions must develop risk profiles that are appropriate for the risks presented by each customer” … With the Thanksgiving holiday coming up next week, look for NASCUS Report to be published on Wednesday, rather than Friday as per usual.
LINK:
Agencies release fact sheet clarifying BSA requirements with charities, non-profits