ALEXANDRIA, Va.—The NCUA Board is set to hold its standard monthly meeting this week, but the real focus in credit unions will be on the public hearing on its proposed 2024-2025 budget at 2 p.m. ET.
During the regular board meeting, the board is set to issue a final rule related to charitable donation accounts (CDAs).
As CUToday.info reported earlier, NCUA’s current definition of a “qualified charity” is limited to 501(c)(3) organizations, but the update is designed to expand that definition to “increase the resources available to help veterans in need and further strengthen the credit union industry’s ties to veterans, military servicemembers, and their families.”
In addition to the final rule, the board will receive a quarterly update on the Share Insurance Fund during its open meeting, set to begin at 10 a.m. ET.
All Eyes on Budget Plans
Most of the attention, however, will go to the 2024-25 budget proposal, which will be the subject of a hearing that begins at 2 p.m.
As CUToday.info has also reported, the agency has proposed a $394.5 million budget for 2024, an increase of 9.5% from 2023. Additionally, the NCUA proposed a budget of $433.6 million for 2025, an increase of 9.9% from the 2024 proposed budget.
The credit union trade groups will be providing witnesses and feedback during the budget briefing.
CUNA’s chief economist, Mike Schenk, who will be appearing on behalf of the organization, said CUNA will also be providing a “comprehensive written comment letter” to the agency on its budget.
Schenk said CUNA has reviewed the entirety of the budget proposal, the general vision of which it supports, but “the problem is that the budget reflects a very significant 9.5% increase in expenditures overall compared to the 2023 forward-approved budget, and the operating budget, which is the vast majority of agency expenditures, 97% overall, reflects an increase of 11%.
‘Surprising Increase’
“An increase isn't all that surprising given the current economic environment, of course, but we are concerned both with the extent of the increases and the reasons given for many of the increases,” continued Schenk. “Many of these issues we care deeply about. One example, of course, would be employee pay and benefits within the operating budget. The agency does lack a lot of flexibility when it comes to the primary drivers of paying benefits, but one of the things that it has a lot of latitude with is the number of new positions it creates and the existing vacancies it fills. There are proposed 28 new positions in this proposed budget (at a cost of) $5.9 million.
“We do support the addition of some of the positions, but as I'll describe in in my comments, we have a lot of very significant concerns with the level of focus of some of the proposed additional staff including and most especially, regional specialists in financial protection,” Schenk said. “We have big concerns around that issue. We believe that credit union members need no significant additional investment to protect them from the institutions they own, and we believe that actually existing exam staff are keenly focused on any hint of anti-consumerism and they do take their jobs very seriously.”
Schenk said CUNA also has concerns around proposed climate-related financial risks.
NAFCU: A Disturbing ‘Pattern’
Ann Petros, director of regulatory affairs with NAFCU, raised similar concerns.
“We are very concerned about the significant increase in the operating budgets, as well as the operating fee for credit unions,” said Petros. “We would love to see a return of any surplus cash from operating funds, but we're less optimistic about that this year than in years past. We continue to see a pattern of substantially increased budgets from the NCUA, and most concerning for us is the proposed addition of 27 new specialized examiners.
“The examiners would be BSA examiners and consumer protection examiners, and the budget justification does not provide much of a justification at all for those positions, so we would like to hear from the board about its rationale for adding,” Petros continued. “We don't think it is necessary. There are no industry trends that have indicated a need for the NCUA to conduct more robust consumer protection examinations. They already have that function built into their exam process, so having specialized examiners for that is duplicative and unnecessary.”
NAFCU’s chief economist, Curt Long, will testify at the hearing.
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