CUs May Get Operating Fee Break, but Trade Groups Blast NCUA Budget

CUNA, NAFCU among the credit union groups calling for the agency to rein in 2023 proposed budget.

Even as NCUA officials said the agency may give credit unions a $15.5 million credit on their operating fees next year, industry trade groups on Wednesday still called on the agency to pare down its spending for 2023.

The proposed budget overlooks areas of possible savings, Curt Long, NAFCU’s chief economist, told the agency’s board during a hearing on the NCUA’s 2023 budget.

“We believe there is immense capacity for the NCUA to reduce its footprint, right-size the organization and become a more nimble, stronger, more efficient, and more effective regulator,” added Jason Stverak, CUNA’s deputy chief advocacy officer.

“Do we need more examiners?” asked Carrie Hunt, president/CEO of the Virginia Credit Union League, as she questioned the need for an increase in the number of agency employees.

Inside the NCUA’s Proposed Budget

The NCUA has proposed an operating budget of $350 million next year—a 9.6% increase over this year’s budget. The agency also wants to add 25 new positions to its staff. In addition, the budget calls for a 30% increase in spending on contracted services.

Jim Holm, a supervisory budget analyst with the NCUA, told the board that funds on hand at the agency may be sufficient to provide a $15.5 million credit towards institutions’ operating fees next year.

The trade group representatives questioned the need for an increase in the agency’s travel expenses next year, adding that remote examinations during the pandemic demonstrated that virtual examinations can be effective.

But NCUA Chairman Todd Harper noted that as examiners have returned to on-site exams, they have found recordkeeping deficiencies, problems with internal controls and instances of fraud.

“While there may be some flexibility in lowering travel costs below what staff have proposed, we must also ensure that our efforts to be penny-wise in exams don’t ultimately result in being pound-foolish for the Share Insurance Fund,” he said.

Response to Trade Groups’ Concerns

The credit union stakeholders’ call for budget restraint gained some support from two members of the NCUA board.

“If resources are finite for the credit unions, they are finite for us,” NCUA Vice Chairman Kyle Hauptman said, questioning whether the agency needs the increase in Full Time Equivalent positions. “The number of 25 new FTEs is hard to justify, especially given the continued positive performance” of credit unions, he added.

“While I support having the specialists we need in the field as credit unions become more and more complex, we must ask ourselves what positions can be consolidated, repurposed or not refilled once an incumbent leaves,” board member Rodney Hood stated.

And Harper himself noted the trade group testimony was useful and may result in changes to the budget before it is presented to the board for final approval.

“Among other things, the staff draft budget requests an increase in the number of specialist examiners and other staff in consumer compliance, Bank Secrecy Act compliance, and small credit union support,” he said. “After considering industry input, we may want to make other choices.”