Removing Barriers Blog

Mulvaney / Heck Introduce OTR Bill
Posted July 17, 2016 by mcarew

This week, Representatives Mick Mulvaney (R-SC) and Denny Heck (D-WA) introduced a bill to amend the Federal Credit Union Act to require NCUA to provide a rationale for any amounts its proposes to use from the National Credit Union Share Insurance Fund. We sent the representatives a letter in support of this bill, which thanked them for introducing legislation that takes significant steps to improve the OTR process. 

Back in April, we filed a comment letter to NCUA on its request for comment on its Overhead Transfer Rate Methodology. This 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.

This latest bill reflects much of our previous work on this issue. It requires NCUA to publish a detailed analysis of how its expenses are assigned between prudential activities and insurance-related activities, and the extent to which those expenses are paid from the fees collected from federal credit unions.

It also requires NCUA to publish supporting rationale for any proposed use of amounts in the Fund contained in such budget, including detailed breakdowns and supporting rationales for any such proposed use.

NCUA must also makes these reports available to the public.

CUNA supports this legislation to provide increased transparency with respect to the overhead transfer rate.