Credit union representatives on Thursday knocked the NCUA for increasing its budget even as the impact of the financial crisis has abated and the number of credit unions has dropped.
Since 2006, the number of credit unions has dropped 25%, while the NCUA budget has doubled, NAFCU President/CEO B. Dan Berger told the agency board.
“This type of budget growth is unsustainable and unjustified,” he said. “Fewer credit unions should mean a smaller budget.” Berger called on the agency to specifically examine those offices that have asked for the largest increase.
The budget briefing marked the first time that the agency has published its budget so far in advance and allowed stakeholders the opportunity to comment on it. NCUA Chairman Rick Metsger said that the agency has provided more information about its budget and opportunities to comment than any other regulator of financial institutions.
He said that the final decisions regarding the budget rests with the board. “This is not a referendum,” he said at the start of the session.
The NCUA has proposed a 2017 spending plan that would increase its budget 2.8%–some $8.2 million—next year. The agency’s 2017 proposed revised operating fund budget would be $299.2 million, with the estimate for 2018 reaching $313.1 million.
The budget represents an increase in spending compared with 2016, but it is $3.8 million less than the amount the NCUA originally estimated it would need next year.
The NCUA budget has increased some 45% since 2010, while the FDIC budget has decreased by a similar amount, CUNA Vice President of Economics and Statistics told the board.
Paul Gentile, president/CEO of the Cooperative Credit Union Association, said that credit unions are perplexed about the large increases, adding that the agency is proposing to spend several million dollars on IT systems, while it remains unclear what that spending will accomplish.
He also criticized the board for transferring the responsibility for determining the Overhead Transfer Rate to the agency staff, adding that the decision should be made by the board.
NASCUS President/CEO Lucy Ito went a step further, saying that the OTR should be published in the Federal Register in advance of its adoption.
NCUA CFO Rendell Jones defended the budget plan, saying that labor costs remain the largest item in the agency budget. He said the only way to cut that budget is to substantially cut the number of employees.
NCUA Executive Director Mark Treichel said the budget reflects a decrease in spending as a result of the agency’s Exam Flexibility Initiative, which will decrease the frequency of some financial institution examinations. He said, however, that the agency will be spending additional funds to update its computer and reporting systems.
Board member J. Mark McWatters said that labor costs could be cut if the agency adopts a virtual examination process. “This is a sweet spot if you really want to save some money,” he said.
McWatters said that the NCUA has put a large amount of its budget on its website, but lamented the fact that few people have looked at the documents.
“No one’s looking at it,” he said.
