By Michael Fryzel
NCUA has clearly bought into the Trump Administration’s goal of a more efficient federal government and less regulation of strong financial institutions. With a program to restructure its internal organization as well as a plan to close out the Corporate Stabilization Fund put in place during the 2008 recession, the agency is moving forward to get things done.
The internal reorganization will produce long-term cost savings and provide more effective oversight of operations. Consolidation of regions, centralization of activities, exam refinements and other changes will permit the agency to function in a more effective way.
The steps laid out to consolidate the Corporate Stabilization Fund into the Share Insurance Fund have been carefully researched and documented. Presented to the industry for comment and suggestions, it will allow the effort to proceed as smoothly as possible and begin the return of assessments paid by credit unions during the corporate crisis.
NCUA has also moved forward to increase the normal operating level of the share insurance fund from 1.3% to 1.39%. This will strengthen the fund, provide greater protection for the industry, allow for potential but not yet realized losses and prevent any immediate assessments.
What More Could the Industry Ask For?
All these programs and procedures appear to be well thought out and sound moves by the agency. The type of effort credit unions and their trade associations should applaud and approve. A federal regulatory agency, thinking progressively, having the best interest of the industry in mind, looking for ways to be more efficient and still get their job done, rebating prior assessments, holding back enough to strengthen the insurance fund and preventing any additional assessment should be commended for their efforts. All this while they have publicly provided the hows and whys of what they are doing. Transparency along with progress and performance. What more could an industry ask for?
Apparently a lot more, as one of the national trade organizations seems to believe. They don’t agree with what NCUA wants to do and not only want to delay the return of funds to credit unions, but also question the value and need for a stronger insurance fund.
Bordering on 'Incompetence'
Calling the proposed use of moneys already collected an “unjustifiable” retention of funds borders on incompetence, failure to understand the role of a regulator and self-serving ranting from the bully pulpit. In addition, asking NCUA to delay payments to credit unions makes even less sense. As it stands, any rebates would not be received until the second quarter of next year. A further delay could push back any return until 2019. It hardly seems such a suggestion can be considered looking out and working for their membership.
One can never anticipate the actions of a regulator. Events happen quickly and a catastrophic failure of a credit union can take everything off the table. The chances of such an occurrence are slim and NCUA seems to have wisely allowed for such a contingency in their proposed plan of action.
NCUA should continue to carefully move forward with their stated objectives while listening to sound advice and suggestions. They should however, ignore those who use self serving rhetoric to advance their own cause.
Michael Fryzel is the former chairman of NCUA.