By Frank J. Diekmann
Before I begin, let me make an admission: the recent news around the UK's departure from the EU got me to thinking about the CU vote on 'choice' and the option of belonging to a league or CUNA only, and I now fully regret having not done more to popularize 'Crexit.' And for those CUs that voted to maintain the status quo, not having coined 'Cremains.'
And with that out of the way...
NCUA has now hosted two “board briefings” at the behest of the agency’s new chairman, Rick Metsger. The concept itself, however, isn’t new: the agency in years past hosted previous briefings.
But what hasn’t been seen before, said Metsger, is the amount of information NCUA has made public.
“We have about 10 times more information available about our budget online right now and it has been there for six months,” he observed.
All that information is what NAFCU and CUNA like to call “transparency,” and the trade groups have worn a rutted path to that well over the past few years, demanding NCUA be more “transparent” with its budget, policies, guidance to examiners, and more.
Now that much of that stuff has been brought up from the well, Metsger noted there’s a bit of irony at work: hardly anyone is traveling the path to go look at it on NCUA’s website. “There have not been a lot of clicks,” Metsger told me when I spoke with him recently in Nashville during NAFCU’s annual meeting. “But people like to know it’s there.”
The Latest Announcement
NCUA’s latest move toward transparency is its announcement it will provide an opportunity to offer comments on its proposed 2017–2018 budget at a briefing in October. The two-year cycle is especially unusual.
“This budget briefing will be more comprehensive than the briefings previously held by the agency. For example, we will release more details on the proposed budget before the briefing, so stakeholders can review,” Metsger told the NAFCU meeting. You can read more about that here.
Metsger has been on both sides of the budget debate. A former state senator in Oregon, he noted, “I heard agency budget after agency budget after agency budget.”
He also said he has no concerns there will be any undue influences over how it spends its money—or doesn’t spend it.
“We have the strength of our convictions,” he said. “I have been pleased with our budget process. We have gone over it line by line. We have invested where we need to, especially in cybersecurity, which I think is a positive thing. The challenge before everyone is to invest time in the budget.”
Why Does Budget Keep Growing?
I asked Metsger how he responds to criticism that the number of credit unions continues to shrink, yet NCUA’s budget just increases every year.
“It is growing, but you can say the same thing about the trade groups’ (budgets),” he said. “The number of credit unions has been reduced, but their asset size and complexity has increased.”
Moreover, said Metsger, the agency has compliance issues of its own to deal with, such as a “plethora of new rules” that are not of NCUA’s making, such as rules from the CFPB and the creation of an Ombudsman’s Office that was required by Dodd-Frank.
“We didn’t create these rules, but we have to enforce, and we have to fund,” said Metsger, adding there are also all the new demands and costs related to cyber-security.
On Feedback, Loss of Institutional Memory, and More
Here are some of Metsger’s thoughts on other issues we discussed while inside the Nashville Convention Center, where a blues band was playing at the same time (I don’t believe it was related):
- On the two board briefings held to date: “I think the first briefing went well. We got good feedback. We are being open and transparent. There are certain things that can seem secret, but it’s not ever meant to be. We’re going to try to have the briefings as often as possible.”
- On feedback to NCUA: “People can call now if they want. If you have a good idea, you don’t have to wait for the briefing. We have a statutory responsibility to (hold board meetings), but people can articulate suggestions at any time.”
- On forgetting where you came from: With former Chairman Debbie Matz, who was on the board during the financial crisis, now gone, what about concerns over a loss of institutional memory on the board? “I am cognizant of it. It’s easy when things are going your way to not to see the downside risk. There will be another downturn, we just don’t know when. It’s important that capital be there and we be prepared. I recognize no one ever lost money on a taxi loan, until… I would like to see more credit union industry veteran leaders talking more about the fact it’s not always smooth sailing.”
- On exam flexibility and 18-month exam cycles: “We want the flexibility to go either way. Every state has different rules. What I hear more about is that we’re there, but three months later the state examiner is there. What we want to do better is the coordination part. Our rules let us be flexible. A hard rule from Congress requiring an 18-month schedule (combined with) a state schedule that is every 12 months means regulators are in the credit union every six months. We want to lessen the impact on the credit union.”
Frank J. Diekmann is Cooperator in Chief at CUToday.info. He can be reached at Frank@CUToday.info, or followed @FrankCUToday.