New year, new NCUA budget, same old outcome
Credit unions are an integral part of the American economy. They provide safe and affordable financial products and services to their nearly 140 million members and Main Street small businesses. As not-for-profit financial cooperatives, every dollar that goes into a credit union goes back into serving their members and communities – unless it’s money they’re required to pay to their federal regulator.
For credit unions, that regulator is the National Credit Union Administration (NCUA). Given the cooperative nature of credit unions, it seems important that its federal regulator adheres to the same principles as the industry it oversees. Unfortunately, it appears the NCUA disagrees with that assessment: The NCUA Board just finalized another significant – and unnecessary – budget hike. After a nearly 8 percent increase last year, it approved a 7 percent increase this year.
It’s imperative to note that, for the NCUA, just over a third of its operating budget comes from operating fees levied on credit unions each year.
The NCUA is happy to pat itself on the back and praise its transparent budget process but is hardly willing to heed the feedback it gets on its budget proposals. Let’s be clear: there’s a stark difference between hearing feedback and acting on it. At the National Association of Federally-Insured Credit Unions (NAFCU), we’re realistic. We know that the credit union industry needs proper regulation and deposit insurance – and those items must be funded.
However, the NCUA has gone beyond that and continues to increase its scope and scale, raising its budget by nearly 10 percent year after year. These budget increases are unsustainable. Credit union margins are tightening. The federal funds rate has increased about five percent in the past two years. With the rates increasing, people are more reluctant to take out loans and delinquencies are rising.
Beyond being nonsensical, it’s irresponsible that Washington bureaucrats are happy to grow their bureaucracies by adding new staff. All the while, credit unions around the country are forced to close their doors, face tightening margins, or find alternative cost cutting measures. The NCUA needs to take a good look in the mirror and decide what kind of regulator it wants to be. Does it want to prioritize safety and soundness while providing the necessary support for credit unions? Or does it want to pull money from credit unions, their members, and communities while increasing a federal bureaucracy?
The NCUA needs to revisit these budget increases. Year after year they hike their budget, and credit unions – and their members – pay for it. While we appreciate the agency’s efforts to have a transparent budget process, it’s time for the NCUA to be more fiscally responsible. Money at credit unions is best kept with those credit unions. Credit unions are safe, secure, and reliable. They work hard to serve their members, communities, and small businesses, but the NCUA is limiting that great work. The agency must be financially responsible by focusing on essential functions and the safety and soundness of the credit union industry – not increasing its authority while leaving credit unions and their nearly 140 million members shortchanged.
