Removing Barriers Blog

NCUA Approves Budget, Delays RBC, Keeps NOL at 1.38%
Posted December 12, 2019 by CUNA Advocacy

Today, the NCUA Board adopted its 2020 - 2021 budget, adopted a final rule to delay the effective date of the RBC rule, and received a briefing on the Normal Operating Level of the Share Insurance Fund for 2020.

NCUA’s 2020 - 2021 Budget

In a 2-1 vote, the Board approved the following:

  • The 2020 Operating Budget of $315,883,000 and 1,180 FTEs, the 2021 Operating Budget of $327,973,000 and 1,180 FTEs, and that $2,000,000 from unspent, prior-year balances, of which $1,750,000 will be reallocated from past years’ Capital Budgets, is available for expenditure from the Operating Fund in 2020.
  • The 2020 Capital Budget of $25,076,000 and the 2021 Capital Budget of $25,205,000.
  • The 2020 Share Insurance Fund Administrative Budget of $6,450,000 and five FTEs and the 2021 Share Insurance Fund Administrative Budget of $6,932,000 and five FTEs.

Staff provided a 2020 - 2021 Budget Justification that details the components of each of these budgets.

The dissenting vote came from Board Member Harper, who described today’s Board meeting as “one in which [the agency] will delay and do little.” Specific to the budget, Board Member Harper expressed significant disappointment that the budget does nothing to strengthen consumer financial protection. Though not included in the budget process, Board Member Harper sought input on a plan to create a dedicated consumer compliance exam program for large, complex credit unions. As stated in CUNA’s comment letter to NCUA on the budget, we believe “altering the agency’s risk-focused examination process and increasing examination-related expenditures is not warranted.”

 

Final Rule – Risk-Based Capital (Part 702)

In a 2-1 vote, the Board voted to delay the effective date of the RBC rule from January 1, 2020 to January 1, 2022. During the additional two years, the Board intends to “holistically and comprehensively evaluate the NCUA’s capital standards for credit unions,” including consideration of asset securitization, subordinated debt, and a community bank leverage ratio analog.

The dissenting vote came from Board Member Harper, who also voted against proposing the delay back in June. Board Member Harper voiced significant concerns with delaying the standard, stating that after a decade of work on the new RBC framework it is time for the agency to move ahead to protect taxpayers, federally insured credit unions, and their members before it is too late.

CUNA urged the agency to adopt the delay in a July letter to the Board, providing that a delay will benefit both the NCUA and credit unions, allowing them additional time to prepare for the rule’s implementation.

 

Board Briefing – 2020 Share Insurance Fund Normal Operating Level

The Board received a briefing from staff on the NOL of the Share Insurance Fund for 2020. Upon the recommendation of staff, the Board agreed to maintain the NOL at 1.38% for 2020. As such, staff does not anticipate an equity distribution to credit unions during 2020.

CUNA continues to advocate for a reduction to the NOL. As stated in a CUNA letter sent last week to the Board regarding the budget, we “encourage NCUA to issue additional Share Insurance Fund distributions whenever possible with the expectation that the initial increase in the NOL was temporary. We look forward to a phase-down of the NOL to 1.30% by 2021.”