NCUA Urged To Adopt OTR Methodology Based On 'Fairness And Accuracy'

WASHINGTON—NAFCU President and CEO Dan Berger asked NCUA to support an overhead transfer rate (OTR) methodology that is based on fairness and accuracy in a letter sent before today’s open meeting where the agency board is expected to adopt a new methodology.
Berger additionally asked that the board avoid any changes to the OTR that "would sacrifice quantifiable data inputs in the name of simplicity."
The NCUA board issued a request for comment on its OTR methodology recommendations in June. The NCUA has proposed revising the methodology to three steps; the agency currently uses an eight-step calculation. The proposed methodology also eliminates the examination time survey. If the proposed methodology had been used in setting the 2017 OTR, the rate would have been set at 60%, compared with the current 67.7%, NAFCU noted.
In its August comment letter, NAFCU urged the NCUA to retain its current OTR methodology, calling it an "objective formula-based model" that "prioritizes fairness, accuracy, and equity."
In Berger’s letter this week to NCUA Chairman J. Mark McWatters, he wrote that the "current OTR methodology has a long history and has been vetted by third parties. It is worth improving instead of migrating to a new largely subjective system," he added.