ALEXANDRIA, Va.-After the NCUA Board voted to lower its budget, overhead transfer rate and operating fee at its November meeting, credit union trade associations were pleased but are still demanding that NCUA better define what is insurance related and what are regulatory activities with regard to the overhead transfer rate. CUNA President and CEO Dan Mica remarked, "CUNA supports the decisions made by the NCUA Board on the agency's budget, particularly since we have long advocated containment of costs and increased accountability to credit unions on how credit union dollars are spent. Through its actions, the board is clearly striving to hold down expenses while ensuring adequate resources to meet safety and soundness obligations." "The 2005 budget represents improved efficiency in the expenditure of funds, keeping in mind the agency's mission of ensuring credit union safety and soundness," California Credit Union League President and CEO David L. Chatfield said. "We are also especially pleased that the agency has reduced the overhead transfer rate, which has been a contentious issue among credit unions.We believe the decrease in the overhead transfer rate demonstrates NCUA's continuing commitment to an amicable climate of openness and cooperation that the agency and the board have fostered with credit unions over the last three years." NASCUS, too, welcomed the lowering of the overhead transfer rate, but added that the methodology is faulty. "NCUA is well meaning when it states that the overhead transfer rate is an `equitable distribution of costs,' " explained NASCUS President and CEO Marty Martha Fortney. " However, state regulators continue to ask what the differences are between the standard definitions of insurance and regulator-related activities. This has never been explained in clear and concise language, and ultimately impacts the agency's accountability in both its roles as insurer and regulator." NASCUS advocated that NCUA erroneously continues to categorize most of its safety and soundness work as insurance related. A statement from NASCUS stated that NCUA's reliance on examinations by state regulators betrays the agency's inaccurate assessment of examiner time spent on insurance-related procedures. "NASCUS has repeatedly and forcefully insisted the OTR is merely a symptom of the underlying conflict of interest arising from the failure to properly separate insurance-related and regulatory costs," NASCUS Chairman Roger W. Little commented. "It is apparent the NCUA does not recognize the importance of allocating costs appropriately between its federal chartering authority and its management of the National Credit Union Share Insurance Fund." Additionally, CUNA's Mica said, "We also look forward to working with the agency next year as it reviews how examiners' time is allocated between insurance-related activities and regulatory ones. CUNA, for some time, has urged the agency to better define `insurance-related activities.' " Little also reiterated NASCUS' support for someone with state regulatory experience serving on the NCUA Board. " Likewise, an NCUSIF advisory panel comprised of state regulators and state-chartered credit unions would allow the board to hear issues and better understand the state perspective," he said. [email protected]