Editor's Note: This story has been updated since it was originally reported.
ALEXANDRIA, Va.–Two members of the NCUA board have indicated they will not vote for the agency's proposed 2021 staff budget as it is currently written and which was recently announced by the agency.
The proposed staff budget has earned kudos from the credit union trade groups, which welcomed the fact is smaller than the current 2020 budget, due largely to reductions costs related to examiner travel due to the pandemic.
As CUToday.info reported here, NCUA said the draft 2021 operating budget is $315.6 million, which is 0.1% lower than the comparable 2020 budget. The draft 2021 capital budget is $18.8 million, or 24.8% lower than 2020.
But during the Nov.19 board meeting, both Board Member J. Mark McWatters and Board Member Todd Harper indicated they believe changes need to be made in the 2021 budget.
McWatters said the agency cannot “forget that the NCUA is funded with other people’s money. Specifically, it is financed by the credit union community and, as such, we should always serve as thoughtful stewards of those funds.”
McWatters said that after reviewing the proposed budget he has found a “number of expenditures” he believes are “simply not necessary or appropriate for a safety and soundness, consumer protection, prudential regulator.”
“Other proposals merely add a shiny and expensive new gloss to functions that we are already performing seamlessly within the agency,” he said.
McWatters called on the credit union community to review the proposed budget and communicate comments and questions to the board before the public budget briefing and hearing that is scheduled for Dec. 2.
Harper Says Cheers May Be Short-Lived
While Harper expressed support for budget changes announced during the Nov. 19 meeting, he said in considering the 2021 budget, the "cheers" the agency has received may be "short-sighted."
"We know that credit unions with higher risk profiles will require additional examiner attention and close supervision next year as the economic fallout of the pandemic unfolds," said Harper. "During prior economic downturns, like the 2008 financial crisis, the NCUA increased its field resources to handle safety and soundness problems. Our sister agencies did the same. Accordingly, we must engage in a comprehensive discussion at the board level about supervisory priorities and field program expectations for 2021. In doing so, we will likely find that we need to budget for more examiners and specialists than provided in the staff draft."
In addition, Harper, who could be elevated to chairman by the new Biden Administration, said NCUA falls short when it comes to its oversight of consumer financial protection laws, as the agency does not "adequately assess consumer compliance management systems or even basic compliance with consumer financial protection laws in most credit unions. We also do not assign a separate consumer compliance rating in the way that other federal banking regulators — and even some state credit union supervisors — do."
Harper called for creation of a dedicated program for supervising compliance with consumer financial protection laws.
"That will require more resources than envisioned in the current staff draft budget for 2021 and 2022," he said.