NCUA’s Spooky Budget Increase Could Be Curbed By Expanding, Not Reducing, Remote Examinations

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Earlier this month, the NCUA wished credit unions a Happy Halloween by proposing an operating budget increase of over $30 million, to a whopping $350 million.

Among the biggest reasons for the hefty 9.5% increase is a proposed $12.9 million for pay and benefits increases, including the addition of 25 new staff members. Those 25 staff positions would consist primarily of specialist examiner and supervisory specialists at regional offices. It would also add staff in the Credit Union Resources and Expansion program, two attorneys for ethics and regulatory purposes, two staff to support the creation of the Ombudsman Office, and two support staff for the Offices of the Chief Financial Officer and Minority and Women Inclusion.

The budget increase also tacks on a ho-hum $6.1 million for contracted services and $5 million for travel-related costs, among other increases. But the budget increases have left many asking if all this is really necessary.

NAFCU spoke up urging “the NCUA to rein in the recent trend of substantially increased budgets.” Others like CUNA have pointed to signs of an eventual economic downturn, including a projected decline of net income for credit unions as justification for the NCUA to slim, not expand, its budget. “These trends suggest the agency should be laser-focused on budgetary discipline,” said CUNA Deputy Chief Advocacy Officer Jason Stverak.

As we saw with remote notarization in Michigan during the pandemic, after a quick and effective response to update notarization in the wake of social distancing, those changes were subsequently pulled back–but not entirely. John Beauchamp called it a win for remote notarization because instead of only two vendors being allowed, nineteen are available to select from.

NCUA similarly responded to the prevailing conditions, scaling back, and adapting as necessary. But rather than build off that adaptation, they seem more content to return to business as usual.

In his recent blog regarding the budget hearing and inflation, Chip Filson pointed out how the NCUA’s budget has gone from $129.9 million to the $367 million figure proposed for 2023–a 182.5% inflation rate over that time. That puts the NCUA’s budget up there with college tuition and fees, among the highest inflated sectors of the economy. All while the number of federally insured credit unions has dropped by more than half from 10,316 year-end 2000 to the less than 4,900 today (and falling still).

And the complaints keep rolling in. As CU Collaborate recently reported, the Ohio Credit Union League urged the NCUA to stick with their scaled-back practices: “During the pandemic, NCUA effectively and efficiently pivoted to a remote examination posture out of necessity without impacting credit union safety and soundness.”

In September, I reported that the NCUA would be moving forward with its plans to fully resume on-site examinations. A decision that some are happy with. Former NCUA Executive Director Mark Treichel, suggested that the decision is supported by examiners and credit unions alike as NCUA staff miss the collaboration and dialogue with credit union management. “I’ve also spoken to a lot of credit unions who are really looking forward to the examiners coming back onsite because they feel that NCUA has asked for substantially more documents than they do normally, and that the communication, albeit while everybody is trying to communicate as best they can, that doing it remotes just leads to breakdowns in communications and a more challenging examination,” Treichel said.

Change is hard. Sometimes it is easier when the circumstances push it upon us. Rather than reverting to old costly systems, perhaps the NCUA and credit unions can continue pushing through the discomfort of a primarily remote examination process and build upon the foundation that was built with COVID. It may be tempting to go back to what we did before, but is it in the best interest of credit unions and their members in the long run?

The question is whether the NCUA will listen or push forward with its budget increases in spite of open opposition.

Author


  • As a supervising editor of CUSO Magazine, Esteban reviews and edits submissions, assists in the development of the publishing calendar, and performs his own research and writing. His experience provides CUSO Mag with a seasoned writer and content curator, able to provide valuable input to contributors, correspondents, and freelance journalists. Esteban has worked at CU*Answers since 2008 and currently serves as the CUSO's content marketing manager.

Comments
  • chip+filson#1

    November 4, 2022

    Well written especially with the details of the 25 new positions. Instead of repurposing employee roles and responsibilities, NCUA wants to add more staff. For example the establishment of a new Ethics officer occurred when the General Counsel who had the responsibility was himself subject to multiple professional failings and allowed to retire. Today that Ethics office continues to expand its staff even though there is no evidence of “ethics” problems, just mission creep.

    Also if board and senior staff were in routine contact with credit unions, in press interviews and even members, there would be no need of ombudsman. Why are existing offices and personnel unable to respond to real concerns by members or credit unions?

    In these two examples, the pattern of shifting responsibility to new offices, versus making current employees and board members accountable, continues to increase staff size and budgets, but not organizational effectiveness.

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