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October 18, 2017

NAFCU rep Zook commends NCUA budget transparency, urges increased efficiency

The NCUA and credit union industry are headed in a positive direction, NAFCU representative Beverly Zook said yesterday during the NCUA Board's budget briefing. But as the agency proposes bigger budgets for 2018 and 2019, Zook testified NAFCU and its members will continue to push for increased efficiency.

"Keeping in mind the need for a strong NCUA, I am not suggesting the agency arbitrarily slash its budget without reason," said Zook, the president and CEO of Money One Federal Credit Union. "Such a dramatic approach to the budget would only serve to raise questions about the agency's ability to effectively carry out its mission. However, what I am suggesting is that there must be a continued agency-wide commitment to increasing efficiency, eliminating redundancy, and creating a sustainable budget that does not rely on annual increases."

The NCUA has proposed $298.2 million in spending for 2018 – a 2.1 percent increase from the restated 2017 budget – and $302.8 million for 2019.

Although the NCUA has cited the growth of credit union assets as a reason for year-over-year budget increases, Zook emphasized that the NCUA's role is to examine and supervise credit unions, not assets.

Zook thanked the NCUA for its increased transparency on the budget process and highlighted areas of the proposed budget that NAFCU supports, including the NCUA's reform plan to:

  • eliminate, consolidate and streamline offices with similar or overlapping functions; and
  • restructure offices to improve efficiency within existing responsibilities.
Zook testifying at budget briefing (rev)
During her testimony, Zook (far right) commended the Board for its increased transparency during the budget process and urged it to pursue additional cost-saving efforts.

Additionally, Zook recommended the NCUA extend its 18-month exam cycle to as many credit unions as possible as a way to decrease the agency's annual operating budget. She also noted that the NCUA's investment in new technologies, which will help identify at-risk credit unions sooner and decrease the frequency of on-site examinations, will likely have a positive impact on the budget.

To close out her testimony on behalf of NAFCU, Zook urged the NCUA to provide credit unions additional rebates from the closing of the stabilization fund and to return the share insurance fund's normal operating level to 1.3 percent as soon as possible.

Zook was part of a four-person panel providing comments on the NCUA's budget proposal. Other commenters included representatives from CUNA, NASCUS and Cooperative Credit Union Association.

NCUA budget resources, including testimony from the hearing, are available here. The NCUA Board will vote on its budget proposal during its November meeting.

During today's open meeting, the board is slated to take up two final rules regarding credit union processes for appealing exams and a proposal on capital planning and supervisory stress testing. A report on the National Credit Union Share Insurance Fund is also scheduled.