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October 27, 2016

Berger continues NAFCU's call for NCUA cost savings

NAFCU President and CEO Dan Berger emphasized the association's continued concerns about the NCUA's ever-increasing budget, calling the pace of growth unjustified and urging the agency to find cost savings wherever possible as he delivered remarks during the agency board's budget briefing Thursday.

"Since 2006, the industry has seen a 25 percent decrease in the number of credit unions, while seeing a doubling of the NCUA budget," Berger said during his remarks. "This type of budget growth is unsustainable and unjustified. Fewer credit unions should mean a smaller budget. NCUA justifies its budget increases by pointing to industry asset growth, however, determination of the budget should not hinge on this factor alone. Size does not equal complexity."

Berger thanked the board for holding the briefing, and he expressed appreciation for the level of detail provided in the budget documents.

budget graph 3
NAFCU graphs

In specific recommendations, he urged that the NCUA address needed cybersecurity examination updates within the budget's existing parameters, and he reiterated NAFCU's request that the agency extend the exam cycle for all well-run, low-risk credit unions, not just those below a certain asset-size threshold. He also said streamlined field-of-membership application procedures and better collaboration with other regulators would save the agency and credit unions time and money.

Additionally, Berger said the NCUA should only approve one year's budget at a time, and he urged the agency to do everything possible to allow for an expeditious refund to credit unions on corporate stabilization in the wake of the agency's final payment to the Treasury Department from the Temporary Corporate Credit Union Stabilization Fund.

NCUA Board Chairman Rick Metsger noted his appreciation for Berger's comments, and he responded that he believes "it's about having the right assets deployed in the right places."

NCUA Board Member J. Mark McWatters acknowledged Berger's call for reduced spending and he noted that 82 percent of the NCUA's budget goes to examination costs, and he argued that spending money now on a virtual examination system could "pay dividends" to the agency in the future.

After the panel on which Berger spoke, the board heard remarks from representatives of American Airlines Federal Credit Union (a NAFCU member), of Fort Worth, Texas; Pearl Hawaii Federal Credit Union (also a member), of Waipahu, Hawaii; and Firefly Federal Credit Union, of Minneapolis, Minn.

The NCUA's discussion draft budgets for 2017 and 2018 project $299.2 million and $313.1 million in spending, respectively. The agency is accepting comments on the budget until Nov. 4.