In “Legislators, Regulators Seek Credit Union Oversight Secret Sauce,” Ms. Cooke puts forth a flawed notion that the size of the NCUA board can make the difference between what is good policy vs. “cheap” policy. Frankly, that is not the issue, efficacy is.
What benefit would be derived from increasing the size of the board? Improved governance is not guaranteed simply because there is more debate or the size of the board increases. Greater transparency and accountability do not necessarily require either of these. For this reason, NAFCU has been steadfast in opposing any unnecessary government actions that increase costs to credit unions without providing any benefit or relief to their members. This has included various past proposals to change the NCUA board from three to five members.
The fact is a move from three board members to five, and additional support staff, would increase the board's expenses in the range of 60%, with no clear benefit. Already, NCUA travel is one of the greatest expenses in the budget. Adding two new board members would not only increase costs directly related to the two additional board members, but it would also add costs for the board members' support staff, which would include additional advisers and assistants.
Adding more bureaucracy at a time when credit unions are already disappearing at a rapid clip due largely to massive overregulation is counterproductive and counterintuitive. The added expenses that would be incurred and underwritten by credit unions would only exacerbate the consolidation and disappearance of Main Street's credit unions. Since the second quarter of 2010, we have lost 1,499 federally insured credit unions – more than 20% of the industry. The overwhelming majority, 96%, were smaller institutions with less than $100 million in assets – those typically found in rural areas.
Ms. Cooke, in the same column, also promotes NCUA parity with other regulators on vendor oversight. The NCUA already is authorized to thoroughly regulate credit unions and their relationships with third parties. Granting the NCUA direct oversight of vendors would be costly and unnecessary and, would not necessarily equate to better oversight of vendors or increased safety and soundness for the credit union industry.
Ultimately, bigger is not always better, and more bureaucracy from the NCUA is not better than simply having the NCUA exercise the authority it already possesses. In the case of NCUA, the consequences of too much bureaucracy is far more dire than too many cooks in the kitchen. Too much bureaucracy could very well threaten the future prosperity of credit unions and, ultimately, squander credit union members' hard-earned funds.
Carrie Hunt
Executive Vice President of Government Affairs and General Counsel
NAFCU
Arlington, Va.
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