ARLINGTON, Va.–When the NCUA board meets on Thursday, much of the attention from credit unions and their trade groups will be on the budget it approves for 2023-24.
As CUToday.info has reported, the proposed combined 2023 staff draft budget is $367.0 million, or 8.1% higher than the 2022 budget. The proposed operating budget is $350.8 million, which is 9.6% higher than in 2022.
Ann Petros, VP-regulatory affairs with NAFCU, noted during a media call that the proposed operating budget is a much larger increase than what “we saw in the eight years prior to 2020, when annual growth (averaged) under 4%. So, it's almost double in terms of dollar amounts.”
As Petros pointed out, much of the increase is around funding development of and support for NCUA’s new exam system, MERIT, as well as for some specialist examiners.
‘Hasty Additions’
According to NCUA, those latter positions, Petros stated, are “to focus on consumer compliance. Petros cited NAFCU’s earlier opposition to what the group has called the “hasty additions of examiners without much justification,” including the lack of “any explanation of an industry deficiency when it comes to consumer compliance issues.”
“We have also urged NCUA to rein in its recent trend of substantially increased budgets (and asked NCUA) to continue to evaluate the operating fund for surpluses and return any surpluses to credit unions,” Petros continued. “We also expressed concern about the spending for MERIT. We think there should be some controls on that spending, otherwise those expenses could continue to significantly balloon…It’s important that NCAA have some sort of metric for the returns on the implementation of MERIT.”
Financial Innovation
Also on the agenda for this week’s board meeting is a proposal around financial innovation, which includes components related to loan participations and eligible obligations. Earlier this year NAFCU sent two letters to the agency advocating for making permanent temporary regulatory relief that raised the maximum aggregate amount of loan participations a federal insured credit union can purchase from any one originating lender.
Petros said as part of that proposal NAFCU is also hopeful of seeing a proposal that would allow credit unions to make investments directly into fintech companies outside of the current limit.
“I don't think that the proposed rule on this week's agenda is going to address that at all, but we're hopeful that will be something in the near future as we know board member Rodney Hood has been really passionate about fintech issues,” said Petros.
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