December 09, 2022

Budget, SIF NOL, financial innovation on NCUA Board agenda

NCUA headquartersThe NCUA Board is set to meet next week and on its agenda are items to finalize its 2023-24 budget, review the normal operating level (NOL) for the Share Insurance Fund (SIF) for 2023, and propose a rule related to financial innovation.

On the agency’s budget, NAFCU Chief Economist and Vice President of Research Curt Long – during testimony before the board at its public briefing and in an October letter – has called on the NCUA to pursue cost-saving efforts. Long specifically urged the NCUA to prioritize a hybrid exam model to reduce travel costs and to review increased costs for contracted services and specialist examiners. The proposed budget for 2023 totals $367 million, an increase of 8.1 percent from 2022.

At its final board meeting last year, the board set the NOL at 1.33 percent for 2022; NAFCU has consistently requested the NCUA return the NOL to its historic level of 1.3 percent. The board in November received a quarterly report on the SIF, which showed the SIF had a total income of $73.7 million with a net income of $26.2 million, representing an increase of $5.2 million in net income from the second quarter.

While the text of the proposed rule related to financial innovation won’t be released until next week, the agenda notes it’s related to loan participation, eligible obligations, and notes of liquidating credit unions. Earlier this year, NAFCU urged the agency to eliminate a burdensome requirement that a federally-insured credit union’s (FICU) internal written loan participation policies must establish a limit on the amount of aggregate loan participations that may be purchased by a single borrower, or group of associated borrowers, not to exceed 15 percent of the FICU’s net worth. The association has also asked the agency to make permanent the increase in aggregate loan participations from a single originating lender.

The board will meet Thursday at 10 a.m. Eastern; a livestream will be available on the agency’s website. NAFCU will monitor the meeting and keep credit unions informed of the board’s decisions.