Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Washington Archive

Washington

NCUA 2014 Budget Contains 6.7% Increase

 Permanent link
ALEXANDRIA, Va. (11/22/13)--The National Credit Union Administration's proposed 2014 budget is $268.2 million, an increase of 6.7% from the 2013 NCUA budget. This is the sixth straight year that the agency's planned expenditures have grown.

Click to view larger image NCUA board member Michael Fryzel, left, talks numbers with agency CFO Mary Ann Woodson at Thursday's open board meeting. (CUNA Photo)
"The Credit Union National Association remains very concerned about the size of the agency's budget and the continued budget growth for NCUA, particularly in light of the welcome decline in the assets in troubled credit unions over the past few years," CUNA President/CEO Bill Cheney said. "Credit unions have to manage resources prudently or be subject to sanctions. The NCUA should not set one standard for itself and another for credit unions. Credit unions remain concerned that they work hard to contain costs and they feel their agency should do so as well," Cheney noted.

The total amount of 2014 funding increase is $16.9 million.

Employee pay and benefits account for 73%, or $194.6 million, of the 2014 budget.

The NCUA also plans to add $1.7 million in new administrative expenses, an increase in contract service expenses of about $3.1 million and $652,796 in new travel expenses.

CUNA has repeatedly encouraged NCUA to use restraint as it sets its budget. CUNA's Examination and Supervision Subcommittee is reviewing the NCUA's budget decision and related budget documents carefully to determine how additional oversight of the agency's budget can be achieved.

The NCUA's original 2013 budget was set at $251.4 million, but the agency in July reduced its projected 2013 budget by $2.6 million a move CUNA supported and commended.

The agency also released the 2014 overhead transfer rate and operating fee scale during Thursday's open board meeting.

The overhead transfer rate has been modified from the current 59.1% to 69.2%. According to the agency, the transfer rate modification is primarily due to the results of the Examination Time Survey for 2013.

Examiners reported spending 88% of their examination and supervision time on insurance related procedures for the time survey ending in 2013, compared to 67% in the previous survey cycle.

CUNA has urged the NCUA to continue to refine its methodology related to the OTR to provide additional clarity.

The agency also approved a 2014 natural person federal credit union operating fee rate reduction of 18.4%, and a 5.1% increase in the asset dividing point for the 2014 operating fee scale that the agency uses to determine the fee assessed to federal credit unions. Federal credit unions with assets less than $1 million will not be assessed an operating fee for 2014. The operating fees for federal credit unions, which will be assessed based on assets as of December 31, 2013, will be due to NCUA no later than April 15, 2014.

CUNA commended this decision for the operating fee to remain at no more than one month's expenses of the agency.

CFPB Bills Passed By Financial Services Committee

 Permanent link
WASHINGTON (11/22/13)--Six bills that would usher in Consumer Financial Protection Bureau reforms were passed by the House Financial Services Committee on Thursday.

Bills approved by the committee and supported by the Credit Union National Association include:
  • The Responsible Consumer Financial Protection Regulations Act (H.R. 2446), which would replace CFPB Director Richard Cordray with a five-member commission;
  • The Consumer Financial Protection Safety and Soundness Improvement Act (H.R. 3193), which would authorize the Financial Stability Oversight Council to stay or set aside any CFPB regulation that is found to be inconsistent with safe and sound operations of financial institutions. The bill would also require the CFPB to take into consideration the impact of its rules on insured depository institutions;
  • The Consumer Right to Financial Privacy Act (H.R. 2571), which would prohibit the CFPB from requesting, accessing, collecting, using, retaining or disclosing nonpublic personal information about a consumer unless proper disclosures are provided to the consumer;
  • H.R. 3183, which would require the CFPB to provide at a consumer's request one free annual report disclosing all of the information about the consumer held by the CFPB; and
  • The Bureau of Consumer Financial Protection Accountability and Transparency Act (H.R. 3519), which would subject CFPB funding to congressional appropriations.
The CFPB Pay Fairness Act of 2013 (H.R. 2385) was also approved.

Final CUSO Rule Approved By NCUA

 Permanent link
ALEXANDRIA, Va. (11/22/13)--The National Credit Union Administration's final rule addressing credit union service organization (CUSO) supervision is revised from the agency's earlier proposal, but the Credit Union National Association remains concerned about the authority of the agency to exercise direct authority over CUSOs.

Under the proposal released in 2011, CUSOs and their subsidiaries would be required to directly file their financial statements with the NCUA, and to forward those reports to state supervisors. The final rule, approved during Thursday's open board meeting, keeps those controversial provisions.

However, the NCUA noted that the final rule is more limited in scope than the proposed rule: The final rule is targeted to CUSOs that engage in high-risk or complex activities such as credit lending, information technology and custody, safekeeping and investment management.

Special requirements for a credit union investing in, lending to, or receiving services from the CUSO include:
  • Services provided to each credit union;
  • The investment amount, loan amount, or level of activity of each credit union; and
  • The CUSO's most recent year-end audited financial statements.
In addition, CUSOs engaging in credit and lending services will be required to report the following activity by loan type:
  • The total dollar amount of loans outstanding;
  • The total number of loans outstanding;
  • The total dollar amount of loans granted year-to-date; and
  • The total number of loans granted year-to-date.
NCUA acknowledged that all federally-insured credit unions with loans to or investments in CUSOs will be required under the final rule to make changes in the agreements they currently have with their CUSOs.
 
The final rule also requires all subsidiary CUSOs to follow applicable laws and regulations and applies all of the regulation's requirements to subsidiary CUSOs. The final rule will become effective on June 30. A registry for CUSOs to file their documents with the NCUA will be finalized in late 2015.

CUNA has actively advocated for another approach since the CUSO rule was proposed and has said the NCUA should take care not to extend its reach beyond its statutory authority. CUNA maintains that the Federal Credit Union Act does not confer authority over CUSOs to the federal credit union regulator except through the oversight of credit unions.

"The NCUA should work with natural person credit unions that obtain services from the CUSOs to provide the financial information on CUSOs the agency needs," CUNA Deputy General Counsel Mary Dunn said following the November board meeting. The agency has said that this method is inefficient and restricts its ability to conduct offsite monitoring and evaluate systemic risks posed by CUSOs.

The NCUA has argued that enhancing the monitoring of CUSOs would protect consumers, credit unions and the National Credit Union Share Insurance Fund (NCUSIF). However, CUNA has said that while a small number of CUSOs have had issues, CUSOs as a whole do not pose a systemic risk to the credit union system or overall concerns to the NCUSIF, and therefore a targeted regulatory approach would be more appropriate.

No TCCUSF Assessment In 2014

 Permanent link
WASHINGTON (11/22/13)--The National Credit Union Administration does not plan to charge a Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment in 2014. However, the NCUA warned that a TCCUSF assessment may be considered "if adverse conditions develop."

The National Credit Union Share Insurance Fund assessment for 2014 will be between zero and five basis points (bp), the agency added during Thursday's November open board meeting.

The Credit Union National Association urged the NCUA to set the range for the TCCUSF assessment as narrow as possible, starting with zero bp. CUNA Chief Economist Bill Hampel broek down what the assessment means for credit unions in a new Inside Exchange piece. (See News Now: Inside Exchange Breaks Down NCUA Assessment News.)

The NCUA is expected to receive $1.4 billion through a settlement with JP Morgan announced this week. The settlement funds "will greatly benefit credit unions" and "will enable NCUA to greatly reduce the assessments that all credit unions have to pay," NCUA Chairman Debbie Matz said this week.

Factoring the net proceeds from the JP Morgan settlement, the remaining assessment range falls to around minus $1 billion to plus $500 million, Credit Union National Association Chief Economist Bill Hampel said. "In other words, future rebates are now very likely," he said.

Credit unions have paid $4.8 billion in TCCUSF assessments since the fund was established. The projected net remaining assessments over the life of the TCCUSF, based on estimates from the second quarter of 2013, now range from -$0.2 billion to $1.6 billion.

Yellen Fed Nomination Wins Committee Approval

 Permanent link
WASHINGTON (11/22/13)--Only a full Senate vote stands between Janet Yellen and the chair of the Federal Reserve Board, after her nomination was approved by the Senate Banking Committee Thursday.

The committee voted 14 to 8 to approve the nomination, which is likely to move swiftly through the Senate after that body Thursday voted to reduce the 60-vote threshold to 51 votes for executive and judicial nominee approval.

Committee Chairman Tim Johnson (D-S.D.) called Yellen "a model candidate for Chair of the Fed." She "understands the challenges facing our economy and the balance the Fed must strike as we navigate the path back to full employment," and has also demonstrated "that she understands the importance of completing ongoing Wall Street reform rulemaking and of the Fed's regulatory role in supervising the riskiest banks."

If confirmed, Yellen would replace Fed Chairman Ben Bernanke, whose term ends Jan. 31. She would become the first woman to head the Fed, or any other central bank, and would lead the Fed for a four-year term.

Yellen has served as vice chair of the Board of Governors of the Federal Reserve System since Oct. 4, 2010. Her term ends on Jan. 31, 2024. She also has served as president/CEO of the Twelfth District Federal Reserve Bank, at San Francisco.

Inside Exchange Breaks Down NCUA Assessment News

 Permanent link
WASHINGTON (11/22/13)--In the latest edition of Inside Exchange, Credit Union National Association Chief Economist Bill Hampel discusses with Paul Gentile, CUNA's executive vice president of communications, the impact of the National Credit Union Administration's decision to hold the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment range at zero for 2014.



"The assessments are behind us," Hampel said. And what about a rebate? While he advised credit unions "don't count on it too soon," a rebate should be recognized when the TCCUSF expires around the end of the decade.

The assessment range was announced at Thursday's open board meeting. (See News Now story: No TCCUSF Assessment In 2014.)