Removing Barriers Blog

Comment Letter to NCUA on OTR and Operating Fee Schedule Methodologies
Posted April 26, 2016 by CUNA Advocacy

Today, we filed a comment letter on NCUA’s Request for Comments on the Administration Operating Fee Schedule Methodology and the Overhead Transfer Rate (OTR) Methodology. We combined our comments on both funding mechanisms into a single letter. 

We at CUNA have long advocated for full transparency and open communication regarding the overhead transfer rate with the credit union community.  We commend the NCUA for opening up for comment the OTR and the Operating Fee Schedule, and further urge the NCUA to continue allowing for notice and comment prior to amending or changing the OTR methodology in the future.   

Our letter reflected our consistent opposition of any overhead transfer of agency expenses to the National Credit Union Share Insurance Fund (NCUSIF) that are not legitimate, substantiated “insurance-related” costs, consistent with fairness to state and federal credit unions and the FCUA.  NCUA’s definition of “Insurance Related Activities” essentially equates anything that is “safety and soundness” with being insurance related.  This necessarily assumes that there will be no safety and soundness oversight in connection with its role as a prudential regulator. 

In short, we feel that “Insurance Related” does not equal “Safety and Soundness”.  NCUA even acknowledges this, in part, noting that “some consumer protection regulations may also be directed at safety and soundness.” Yet safety and soundness is only carved out of overhead transfers as they relate to consumer protection regulations.   

Our goal here is to ensure a fair distribution of the charges for the supervision of credit unions consistent with the FCUA.  If, as we have urged elsewhere in this letter, NCUA would make better use of SSA examination results by examining healthy State-chartered credit unions on an alternating basis on an 18-month cycle, the OTR would likely fall below 60% and NCUA’s total budget would also be reduced. 

Finally, the NCUA should continue to use a formula-driven approach to the OTR, however, the methodology should be revised by the Board, via notice and comment, to provide only legitimate, substantiated, “insurance-related” costs, pursuant to the respective FCUA Title, and consistent with fairness to State and Federal credit unions and the FCUA.