NCUA Board Approves Budget Over Harper Opposition

Overcoming the vehement opposition of board member Todd Harper, the NCUA board Friday approved its 2021-2022 budget.

Republican Chairman Rodney Hood joined fellow Republican Kyle Hauptman in approving the budget, with Harper opposing it.

Harper noted several reasons for his opposition, including his belief that the agency needs a staff dedicated to performing consumer protection exams. He said the budget includes one additional staff member to study the issue, adding that it is “simply not a strong enough commitment.”

That staff member will have the responsibility to help develop a proposal to enhance consumer compliance exam procedures at the largest credit unions that are not subject to CFPB supervision. The staff member would be required to submit a report to the NCUA board by Oct. 15, 2021.

Harper said the Oct. 15 date is arbitrary and that he favors an expanded consumer protection staff.

Hood replied that he had the votes needed to kill even that one position but would not do so “in the spirit of bipartisanship.” And he added that any expanded consumer protection effort would require board approval. The board will continue to have two Republican members, Hood and Hauptman, even if President-elect Biden designates Harper as chairman.

During a presentation on the budget, agency CFO Eugene Schied noted that agency officials made several changes since they presented a draft budget last month.

The board approved an operating budget of almost $314.6 million for 2021 and almost $317 million for 2022. Schied said the 2021 travel budget was reduced by 10.1% since the draft budget was released as a result of “lessons learned” during the pandemic about off-site work. The budget also includes two new positions to support financial technology and access.

The budget also includes $300,000 to develop a mechanism, such as a survey, to obtain feedback from credit unions on their interactions with the NCUA.

Schied also said that the Office of Personnel Management has provided the NCUA authority to temporarily hire up to 30 people who have retired from federal service to assist the agency in exams needed as a result of the economic crisis caused by the pandemic.

Harper said that the agency has the responsibility to prepare for the economic fallout caused by the pandemic, adding that he doubts that the agency will find 30 retired people to fill the temporary positions.

“We need to modify our examination program, and we need to increase our examiner ranks, at least on a temporary basis, to work through the anticipated problems,” Harper said.

“I believe investing resources to stay on top of any issues that come up in the credit unions with a high-risk profile and in credit unions with more than $500 million in assets, which each have the potential to cause $100 million or more in losses to the Share Insurance Fund, should be a priority and should be in place at the start of the year,” he said.

He said the agency has identified several high-risk institutions for which the agency has no plans to examine in 2021. He said he believes the agency needs an additional 36 examiners next year.

Hauptman, who has been a vehement critic of strict regulation, made it clear he is skeptical of budget increases. “We can’t just demand money from hard-working people and say we will spend it better than they will,” he said. “Everybody else has to go on the open market and earn it.”

In other business, the board agreed not to change the Overhead Transfer Rate methodology but agreed to study possible enhancements to the calculation.

The board also approved an operating fee final rule that excludes from total assets any loan made under the Paycheck Protection Program. The plan also changes the time period used for calculation of the fee, Currently, total assets are calculated using a federal credit union’s Dec. 31 Call Report of the preceding year. Under the final rule, total assets will be calculated “as the average total assets reported on the FCU’s previous four Call Reports available at the time the NCUA Board approves the agency’s budget for the upcoming year.”