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CU belt tightening should be reflected by agency CUNA
WASHINGTON (12/14/10)—In light of the significant “belt tightening” of many credit unions and the Obama administration’s proposal to freeze civilian federal workers’ salaries for two years, the Credit Union National Association (CUNA) continues to urge the industry’s federal regulatory agency to take similar action. In a letter to National Credit Union Administration (NCUA) Chairman Debbie Matz, CUNA President/CEO Bill Cheney underscored that although credit unions are well capitalized generally, the past three years have been “very trying” for credit unions. “With elevated loan losses and expenses related to share insurance and corporate credit unions, credit unions earned very little net income in 2008 and 2009. This year net income has recovered somewhat, but is still far below ‘normal,’ especially considering the need for many credit unions to rebuild capital,” Cheney wrote. Cheney continued, “(W)e understand members of your staff are seeking more information about the (administration’s salary-freeze) proposal to determine its implications for the (NCUA), which as an independent federal agency may not be covered by the proposal.” Regardless of the staff’s determination, Cheney urged, the NCUA should agree at this time to implement a salary freeze to the fullest extent possible. At its November open board meeting, the NCUA approved a $25 million—or 12%--increase for its 2011 budget over its 2010 funding plan. The total budget for 2011 will be just over $225 million, and part of that would go to fund pay increases that could, in extreme cases—hover between 6% and 8%. In its letter to the NCUA chairman, CUNA noted the support CUNA, credit unions and the leagues have always shown for “a strong independent agency, which has access to sufficient resources in order to ensure safety and soundness objectives under the Federal Credit Union Act are adequately met…” That support is unwavering, CUNA said, despite the unusual situation that the greatest part of those resources come directly from credit unions. “In light of the belt tightening at credit unions and the new proposal from the administration, we believe it is appropriate and reasonable for NCUA to do all it can to contain its own costs,” Cheney wrote.


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