CU trades tell NCUA to be more specific with strategic plan

WASHINGTON-The national credit union trade associations wrote NCUA on its initial draft of the agency’s 2003-2008 Strategic Plan complaining that the regulator needed to be more specific on certain items, namely security issues after the events of September 11 and agency staffing. Staffing, which eats up the majority of NCUA’s budget, is a yearly sore spot between credit unions and their regulator, but the unique events of last fall have brought crisis management to the forefront. More specifically, CUNA suggested that it would be very useful to the credit union community if the agency “incorporated NCUA’s crisis management goals and objectives, and addressed the resources that would be diverted to deal with such events.” It is important for credit unions to know what the agency is doing for them in the situation of a broad scale security threat as well as what it will cost the credit unions, most of which ultimately fund the regulator. NAFCU pointed out also that the plan does not address how the terrorist attacks will impact NCUA’s oversight of credit unions. The plan also does not discuss how the agency’s goals in the face of economic change, another national issue that is strongly affecting credit unions. Prior to 9-11, the economy was already sagging, but after that day, it really took a downward turn, which has caused a great influx of deposits into credit unions. This is a great concern because of the fairly newly adopted Prompt Corrective Action requirements. Nearly every year when the agency announces its budgetary decisions, a communal groan can be heard in credit union land, so it is no surprise that staffing issues were raised in connection with the strategic plan. NASCUS came down hard on the agency pointing out that the reduced workload from the declining number of federal credit unions and the upcoming implementation of the risk-focused examinations should lead to dollar savings for the stake holders. NASCUS also suggested a greater reliance on state examination reports to help reduce staffing needs. The group pointed to the Federal Deposit Insurance Corp. and Office of Thrift Supervision, which are going through major efficiency overhauls. The letter recommended that the agency be more specific in its efficiency and streamlining goals, stating that the capital resource goal amounts to “a series of non-controversial opinions that we can all support.” Additionally, the state supervisors said, from the plan, it is hard to tell if the agency is planning to increase or decrease staff levels. NCUA Chairman Dennis Dollar is on track with his stated goal to eliminate, through attrition, more than 4% of full time equivalent positions by the end of 2003. Another annual rite of passage for the agency is the setting of the overhead transfer rate, which is the percentage of the agency’s budget to be covered by the NCUSIF for insurance related work. The state chartered credit unions help fund this through their 1% deposits on insured shares. NASCUS historically has favored a lower overhead transfer rate while the federally chartered credit unions get more of a break on their operating fees with a higher rate. To the contrary, NAFCU insisted that NCUA “maintain self-reliance in identifying, assessing and managing risk to the NCUSIF.” They point out that not every state receives equal resources for credit union examination. Additionally, NAFCU feels the financial health of the agency should be included in the report in addition to the Annual Report. NAFCU also expressed a level of anxiety over the risk-focused examination approach and its more subjective nature. “NAFCU understands that every credit union, and therefore every examination, is unique, but NAFCU is concerned that the more subjective measures within the risk-focused approach should be implemented with significant oversight and coordination to ensure consistent treatment of credit unions,” the letter read. CUNA recommended NCUA stick within the business of safety and soundness of the credit union community. “In several areas, the plan reveals the agency’s intent to develop programs and initiative that we believe are beyond its purview as a regulator agency. While many of the goals and ideals addressed in the plan are laudable, we do not believe it is NCUA’s role to undertake them,” the trade association wrote. CUNA cited NCUA’s goal to enhance information sharing capability of Information Systems and Technology best practices among examiners and credit unions as one example. CUNA also said greater details on Reg Flex objectives should be provided. [email protected]