Keep the cash with credit unions
Prudent budget management is essential for financial security and prosperity. Credit unions help American families achieve this, and they practice what they preach by responsibly managing their institutions’ portfolios to ensure a strong bottom line and the ability to invest in their communities. But what about the National Credit Union Administration (NCUA) – the industry’s regulator? Does it live up to this credit union ethos?
I’d say no, and the NCUA’s most recent board meeting held just last week shows that. During its mid-session budget review, the agency revealed it projected $5.1 million in surplus. Instead of using that money to lower fees credit unions will pay next year or returning it to institutions, the NCUA decided to spend $737,000 on new staff. On top of that, this year’s projected budget surplus is roughly half of last year’s projection.
As the Senior Vice President of Government Affairs at the National Association of Federally-Insured Credit Unions (NAFCU), I have continued to argue for the NCUA to exercise transparency and fiscal responsibility, including not hiring new staff unless essential to the agency’s function. Credit unions deserve a clear breakdown and explanation for unjustified increases: The NCUA is fully funded by the credit unions it regulates – and in turn, the hard-working Americans and Main Street businesses that trust them with their money.
Credit unions, as not-for-profit financial cooperatives, pride themselves on being safe, secure, and reliable. They focus on being fiscally responsible and transparent to the members they answer to. It is only fitting that the agency tasked with overseeing credit unions follows the same standards.
The NCUA holding budget reviews is certainly transparent; however, the agency should also provide a comprehensive breakdown of its budget by category. This breakdown would help stakeholders understand how funds are allocated and align with the agency’s goals and priorities. Credit unions and their members deserve a clear understanding of how their dollars are being utilized.
Additionally, the agency needs to ensure that it’s practicing fiscal responsibility. NAFCU has called for the NCUA to prioritize essential services and programs. Wasting money on non-essential initiatives detracts from the primary objective of safeguarding the credit union system. Unnecessary budget increases drain valuable resources that could be better used by credit unions to meet the needs of their members.
Every dollar spent by the NCUA should be scrutinized to ensure it is directly contributing to the agency’s core responsibilities.
To strengthen its budget process, the NCUA should collaborate with credit unions. Credit unions are held responsible to their member-owners, and they should have a say in how that hard-earned money is spent. The NCUA’s budget process has an open-comment period for a reason: The agency should use the knowledge and experience within the credit union industry to better inform its decisions. This collaborative approach will not only result in more effective budget planning but also strengthen the relationship between the NCUA and credit unions.
The agency’s mission is to ensure it is “protecting the system of cooperative credit and its member-owners through effective chartering, supervision, regulation, and insurance.” One part of protecting credit unions is limiting the money taken from them that could be used to serve their members and communities. The NCUA must be transparent about how credit union dollars are allocated, how that aligns with its mission, and ensure that as much money as possible remains with credit unions to support the financial needs of their 137 million members.
