Press

The Honorable Mick Mulvaney
United States House of Representatives
Washington, DC 20515

Dear Representatives Mulvaney and Heck,

On behalf of the Credit Union National Association (CUNA), I am writing in support of your legislation, H.R. 5869. CUNA represents America’s credit unions and their more than 100 million members.

CUNA has long advocated for full transparency and open communication regarding the overhead transfer rate (OTR) with the credit union community. Your legislation would make sure any overhead transfer of agency expenses to the National Credit Union Share Insurance Fund would be legitimate, substantiated “insurance-related” costs, consistent with fairness to state and federal credit unions and the Federal Credit Union Act.

The OTR is designed to cover the NCUA’s costs of examining and supervising risk to the share insurance fund, and the operating fee covers the portion of operational costs for non-insurance related aspects of operating the agency. The NCUA’s operating budget has two primary funding mechanisms: the OTR, which is funded by all federally insured credit unions; and the operating fee, funded only by federal credit unions.

The current OTR methodology has been in place since 2003, but with changes in definitions and interpretations, the OTR has risen to 73.1% in 2016 from 52% in 2008. This rise has occurred despite a dramatic decline in the number of troubled credit unions.

Recently, NCUA published its overhead transfer rate (OTR) and operating fee methodology for public comment and offered an alternate OTR model that would result in a lower rate. CUNA has pushed for this transparency for a number of years and we appreciate Congress’ oversight on this matter.

We appreciate that your legislation goes several steps further, by requiring that NCUA publish a detailed analysis of how its expenses are assigned between prudential activities and insurance-related activities and the extent to which those expenses are paid from the fees collected pursuant to Section 105, or from the Fund. Further, we support the language to require the NCUA to publish supporting rationale for any proposed use of amounts in the Fund contained in such budget, including detailed breakdowns and supporting rationales for any such proposed use, and requiring that NCUA make these reports available to the public.